The XP CD is bootable and has the tools you need to reformat/re-partition/reinstall/repair the operating system. All you have to do is put it in the drive and boot up.
Of course, if it doesn't boot from the CD, you'll have to go into the BIOS (Setup) and change the boot order to put the CD drive first.
If the computer came with a Restore or Recovery CD, use that. Those usually have pretty clear instructions so just read each screen as it comes up and make your choices.
If it's a straight Windows XP installation CD, if you want to reinstall Windows, don't choose the repair option the first time it's presented...it'll ask if you want to use the Repair Console. Tell it you want to install Windows and it will finally give you the choice to reinstall, and that's the one you take.
Whatever you decide to do...given that the computer is only a few days old, I'd probably wipe it clean and start over...take that Norton install disk away from your cousin.
