Ehmm.... GRUB?
Why don't try all that again, but this time do an install of LILO.. methinks it might at least work better for now, and then once you get everything set up and working to your liking you can worry about installing GRUB.
-zsejk
P.S.: I would not have that free space on there... just use cfdisk and erase all partitions (since you don't have XP on there anymore anyway), set up one primary ext2 Linux partition (make it / for now; you can change that later), and set up one primary Linux swap partition (use as much space as is left after you set up the first); but above all, make sure you install LILO, and install it to the MBR.