All you have to do is put the cd in and restart, it's bootable. If it's not booting, then you have to go to your PC's bios and make your cd drive the first bootable device. Probably if you have a floppy drive, it's the first bootable device.
Or you can just insert the cd and run setup.
Either way, you can do a clean install with XP Upgrade. When you go into the whole setup menu it will ask if you want to format. If you already formated your hard drive, XP Upgrade will then instead ask you to insert the CD of a previous version of Windows.
Hope that helps, sorry if it isn't clear.