Formatting Issues

I've got this problem whereby I can't format my harddisk without plugging in my external harddisk. I'm running windows xp professional, what i did was trying to boot from disc and trying to format and reinstall from there, but I wasnt allowed to if my external (portable hdd) is not plugged in, no matter what keys i strike on my keyboard won't work and i realise my keyboard was sort of like disabled.

Pls kindly advise me on what is happening as im really clueless. my external hdd was a newly bought seagate 250gb hdd. Thank you