To run XP you need to install Parallels or VM FusionWare or Bootcamp. To get the disc out hold down left mouse button after powering on and the disc will be popped out.
I'd recommend a visit to your local Apple Store. If you keep fiddling with it and trying to fix it yourself, you will only do more damage, and Apple won't cover that sort of thing under warranty.
I almost have a similar problem while I was installing Windows XP. After the set up copies all the required files (immediately after selecting the drive) the computer restarts and I get a screen which says "press any key to boot from CD....., disk error, press any key to restart. There is no response after I press any key. Please help me with this issue.