You don't need to bother with jumper settings if you're just using one drive per SATA or IDE channel. (In fact, I can't even remember if there are any jumpers on a SATA drive, it was a while back that I installed mine.) Just leave it on 'Auto' or 'Cable Select'.
If you're going for a new install of Windows XP on a brand new disk you'll need to boot from the XP CD and format the disk during the install process. This may require you to enter drivers from your hard-disk drive controller manufacturer - these should have come with your motherboard.
If you're just adding additional space to an existing set-up then XP will automatically detect a new drive if it's been formatted. If it's unformatted you need to go into the Control Panel, select 'Administrative Tools', choose 'Computer Management' and then click on Storage. Your current hard disk will show up, probably as an NTFS partition, and your new disk will show-up as unformatted. You can then choose what to do with it within that programme.