but i burned it to an ISO disk using nero, copy and pasted the "setup xp" file and burned it, went in to the bios changed it so cdrom loads first, and restarted.. and its no-go.
If the copy of xp you downloaded was bootable you buggered it up by adding setup.exe. You should just have burned from image and that would have been ok.

Non bootable copies of xp can be made bootable and there was a link to a tute post here on AO ages ago, which i can not find now. You can download a set of files to make a boot enviroment from floppy disks from microsoft.