It sounds like you haven't managed to set the BIOS boot device order correctly yet. If you go into the BIOS settings one of the top level menus is likely to be 'Boot'. Go to that menu and you'll usually find some way of telling the 'puter the order of where to look for an OS - you want to put CD-ROM (maybe called ATAPI device) higher up the list than your HDD. Then, hopefully, it will let you run the installation process.
Another option is to run setup from the installation CD from Windows - I think this will give you an option to repair an existing installation or to install a 'clean' version. Never done it myself but I'm pretty sure I've seen the option.
Last option. If you have access to some old installation disks (c Win 98), create a bootable floppy and copy fdisk.com (from the installation disk) on to it. Boot from the floppy - again you may need to change the boot device order in the BIOS - and run fdisk. This will let you partition the HDD and works at a lower level than the OS. It's usually my fallback when Windows won't let go..... One caveat - you will lose everything on the HDD so before doing it make sure you have copied everything you want to keep onto your external HDD first.
Drop me a PM if you get to the last option but don't have any old installation disks or if you get stumped in some other way and I'll see if I can help any more.