I will try just the AC route

You might have a bad CD there.

Is this the Gateway Recovery disk?

that's what I'm using. I have another XP disk tha I bought for another CPU that I'm having trouble with. Will it work?

It might work but it might also not take the Gateway key.

The Gateway disk might be different in many ways so it is best to try and get that working.

Do you have any CD cleaning tools?

no

Here are Gateway's reinstall instructions: Is this what you have been doing?

1 Insert the red Drivers and Applications CD into the CD or DVD drive.
2 Restart your notebook.
3 Select 2. Boot from CD-ROM.
4 Select a language option.
5 Select 1. Delete all files (Automated Fdisk/Format).
6 Select 1. Continue deleting all files and restart.
7 When prompted, press any key to continue.
8 Select 2. Boot from CD-ROM.
9 Select a language option.
10 Select 2. Automated installation of Windows (XP or 2000).
11 When prompted, remove the red Drivers and Applications CD and insert
the blue Operating System CD into the CD or DVD drive, then press any
key to continue.
12 When prompted, accept the License Agreement by pressing Y.
13 Wait while the setup program copies files to your hard drive. When your
notebook restarts, do NOT press any key to boot from CD.
14 When prompted, insert the red Drivers and Applications CD, then click
Continue. The Gateway Application Loader automatically installs your
drivers and programs. Your notebook restarts several times during this
process. Do not press any keys or buttons during this process unless
prompted to do so.
15 When the Gateway Application Loader has finished, go to the Windows
desktop by clicking OK.
16 Install additional programs by following the instructions in “Reinstalling
programs” on page 238.
17 Install other software, such as Microsoft Works Suite and gaming software,
by following the instructions in “To reinstall other programs from a CD:”
on page 240.

I only have one disk....
actually I just found it

So you do not have the red Drivers and Applications CD?

i do have them. going through the process now. i will let you know how it goes. so far so good

stopped on me, trying again