"but in both cases when xp does the first boot while installing files. it goes back to boot from CD"
At the point it starts to reboot, take the CD out - it should start booting from the Hard Drive. Put the CD back in again when the install procedure complains it's missing.
Check the boot sequence in the BIOS - make sure the hard drive is in the sequence, or it'll never try to boot from the hard drive.
The cables are irrelevant to this, as long as you do have the cable installed correctly and the drive jumpers set correctly.