If it was a Dell disc, you would be able to boot to it and just run through the wizard to install XP from scratch. Windows will not need to be activated if was installed on Dell hardware.
But if you have a retail XP install disc, its going to want the license key off the Microsoft sticker that should be somewhere on your computer, and it needs to be the same version of Windows (Home, Pro, or Media Center) or it won't accept the key. And more than likely the automatic online activation won't work so you'd have to call to get that sorted out.
Either way, make sure you go to Dell's website first and download at least the chipset, display and network drivers for XP for your model and put it on a thumbdrive or CD. You should also go to
http://windows.microsoft.com/en-US/windows/security-essentials-download and download the Microsoft Security Essentials installer along with the full Internet Explorer 8 installer here:
http://www.microsoft.com/en-us/download/details.aspx?id=43 . You may not like or use IE8, but it really should be installed to simply get rid of the ancient IE6 which has major security issues.
Once XP is up and running, install chipset drivers, reboot, display drivers, reboot, network drivers, and reboot. Install IE8 and reboot. Install MSE and update it. Only after that should you run Windows update as many times as it takes to be fully up to date. Install Service Packs first, and by themselves. When you're compltely done, defrag afterwards. Go to
http://downloads.malwarebytes.org/mbam-download.php to download and install Malwarebytes, update it, and run it once a week.
I've done Windows XP installs more times that I can count, and it's easy as long as you're prepared and know what to expect.