1. backup any files you have on your C: drive (or whatever drive you have windows on)
2. put in the XP CD and reboot your computer
3. make sure your BIOS is set to check CD-Rom for boot disks
4. follow the idiot-proof instructions given my MS on the Install disk
-a. basically it'll ask you to choose a partition on a drive to install windows. select whichever drive partition, even though it's already being used.
-b. it will then ask you to reformat that part, tell it to do a nice full format to NTFS.
-c. let it do the rest for a while. it will automatically figure out your internet connection and some of hte basic drivers. of course, you say your internet was setup in an odd way, so maybe ask your friend about that.
do a search on google for installing windows xp and i'm sure somehting will come up.
hope this was helpful at all, its not a terribly difficult process once you get going