Uiiiih .... well. Now.
Yes, in principle you can install. Before you do, you might want to check for a repair(?) / recovery(?) / rescue(?) CD, maybe there is a chance to do it without a comprehensive reinstall (dunno, I don't use xp).
login as root
open a shell
read the output and post it here.
search for the file lilo.conf and post it here
compare with the given suggestions.
Stay calm ... your questions come faster than I can answer
You can certainly keep Linux if you want to. I do not know what functionality Microsoft assigned to its boot process, so I do not know, what it can restore ...