Install Debian8 on old HP-XP revisited
 

XP booted into installer configuration. Install progressed to loader option, GRUB or LILO and rejected both options. How do a proceed from here?

Your post is a little thin on details. Debian is asking whether you want grub or lilo? I don't think so. Also, XP booted into installer configuration? What does that mean?

32 bit or 64 bit machine? Do you have another machine? Most computers since 2006-ish boot from USB. You can create your install on a bootable USB on another machine. Lots of options without going down strange never been before back roads.

GRUB or LILO, HP-XP booted into installer configuration: I set the BIOS to boot on the CD-DVD external drive. The #1 Disk has debian installer plus most of the popular applications. It did boot and the installer option was selected. Install proceeded through language, time zone, root pass word, etc. until an option to select GRUB or LILO was reached. The installer would not accept either GRUB or LILO. The installer said that if I selected neither I would have to initiate the kernal via the command line (after completing the rest of the install). I assumed from that I would have a shell (BASH) and I could somehow get a kernal image and then proceed from there.

32 bit or 64: The OLD HP-XP is yes, an outdated machine.

I am just trying to have some fun here. I got my gandkids started in computing on Linux and C and now they are way ahead of me. I got to show them something.

USB: with a little research, the USB looks like the best option, I have a couple Linux machines and one BSD. I am not sure about the USB inet(?) option.

If you have a bootable usb linux, you can use it's grub to boot another if it wasn't able to install via the installer. Or do a chroot to install grub manually. I often do linux in linux installs and don't bother to install grub until after I've booted that install for the first time. It's as simple as $(update-grub) from the OLD install and it's grub as root.

I'm not sure about the inet you're referencing, but before systemd there was sysv and inetd was something which ran that would start services once a network packet requesting them was received. Back when 386s roamed the land and having everything always on simply wasn't an option. If you're running a bsd or the kfreebsd option in debian, those things are probably still in play. If older stuff doesn't interest you, then avoidance is probably best.

I've installed Debian at least 30 times, and I was never given a choice between grub and lilo. What happens when you try to install grub? Look at the logging terminal (CTRL+ALT+F4) in the installer.

i can't even get search results on "hp-xp" - is that the exact model number? how old is it?
which debian version are you trying to install, download link please?

On old hardware, you are best off trying a live distro first to check everything you want works, & then install it.

Much easier to do it this way & faster. :)

I suggest giving AntiX a try, it is based on Debian - http://antix.mepis.com/index.php?title=Main_Page

Depends on the speed of your downloads, plus data caps. I often do debootstrap installs because it's faster bandwidth wise than getting an install ISO installing it and getting updates for everything that just installed. But my installs often are my live distros. USB drives are fast and cheap now. Just the way I like them.