Well then, that is a puzzle if XP can still grind away with intensive graphical programs, yet your system reboots only with the Fedora installation CD in the drive.
Can you put a CD in the drive whilst in XP and see whether accessing/loading from it/saving to it etc can induce any bad behaviour in the machine.
Have you tried to burn yourself another disk 1 (presume all the md5sums were OK if you downloaded it) and give that one a whirl.
Other than that, I have run out of suggestions.