Cant get dell insiron 1525 to restore factory settings

Dell Tec told me to choose "To set up Windows XP now" (with Operating System CD in drive) If it doesn't work try Dell Tech Chat. I kept getting "Windows could not start because the following file is missing or corrupt: <Windows root>\system32\ntoskrnl.exe. Please re-install a copy of the above file." (I tried to restore to original factory, followed directions, f12 boot from CD but when I get to "Agree to Licensing Agreement" none of the keys work except ESC.) I was able to get on the Dell Tech Chat at http://support.dell.com/support/topics/global.aspx/support/chat/hardware_chat?c=us&cs=19&l=en&s=dhs (you need your Service Tag) tried same steps but keys would not work so they sent me a new hard drive that I can install myself. Evidently there is no way to fix this. Tech says wireless will work with new hard drive. Is your warranty active? I always get SquareTrade.com (cheaper than most) warranty. They fix or give you what you paid. Everything I buy breaks & sooner than you would think.