and install XP that came with the new one (I guess you can do that right? Got the XP start up CD, so should be able to install that on this PC right?)
No, not necessarily. IF it's a dell or certain other makes, the OS will only install on that make. Plus, if XP's already on your new computer, it ain't gonna activate twice (as in on two different PC's).....
Plus, depending how old your PC is, it may not be happy running XP.