If you have misplaced this disk the drivers for the D2400 can be downloaded from this page. While Windows installs, locate your Dell Resource Disk, Drivers and Utilities.
Delete the NTFS partition and choose to install Windows in the unallocated space that results. You should see two if you have the original hard drive, one labeled either EISA or FAT16, and one large partition labeled NTFS (C: ). On the menu that follows that select the choice to delete a partition. Once the CD has booted, press Enter to continue the installation and accept the license agreement. If you don't follow the instruction, the computer will ignore the CD and try to boot from the hard drive. Either one will instruct you to press a key to actually boot from the CD. Either use the F12 one time boot menu to select CD ROM as the boot device, or go to setup using F2 and set the CD ROM drive to the first boot position. Once you have saved your data you can put the drive back into the computer and perform the new Windows installation. You should be able to copy from the drive just as though it were inside the computer.
You can also purchase an external hard drive shell that uses a USB interface, mount the problem drive into it, and attach the assembly to a working computer. You can then copy your data to the working hard drive. If the computer you are using now has an IDE disk controller you might be able to temporarily mount your hard drive in that computer as a slave drive. If you have data on the hard drive that you wish to keep you will need to find a way to save it to another storage device. Once you boot successfully and accept the license agreement Windows setup may give you an option to perform a repair installation, but if you try, you should get a message stating that the version on your hard drive is later than the version on your CD. If like most of us you have updated to Service Pack 2 you will not be able to perform a repair installation with that CD.
Unless you have ordered a replacement Windows CD from Dell you should have the Windows XP with Service Pack 1a installation CD. If you are convinced that the disk tests ok you will need to perform a clean installation of Windows. You state that you have run all the tests including the custom test for the hard drive is that the same thing as the extended test? Should have required about 45 minutes to run. With regard to the Windows installation CD, you need to boot from the disk to make it do anything.
"Compatible" is an ancient setting intended to allow the computer to run older software that used the CPU clock cycles for timing and so wouldn't run correctly at the computer's full speed. If it says "Compatible", follow the instructions to set it to "Normal". Scroll down a few lines and go into CPU Information. Before going further, restart the computer and use F2 to get to setup.