If you change to XP, there is the chance that some of the computers devices may not work properly as XP may not have all the drivers that your computer may need (ex..usually this will affect network, modem and some other devices)
At this point, you would need to find compatible drivers for XP that will work in PC shipped with Vista.
-This would be trial and error to try to find compatible drivers that still may be needed once going to XP
Not saying it can't be done but possibility there will be some sort of driver issue
To install XP to laptop, I am sure you will need a version of XP that has SATA drivers integrated into the installation.
-More than likely the version you have purchased does not have SATA drivers and will not be able to install as the install disk will not recognize the hard drive
But you did mentioned the BIOS settings changes you have made and that may address the issue
this should help you with the install process
How to Format Drive and Install Windows from Scratch Geek to Live: How to format your hard drive and install Windows XP from scratch - Feature - Lifehacker