So it boots from the IDE alone, but not when the SATA drive is installed? Did you boot from the old IDE with the SATA connected?
It may be that your XP doesn't have SATA drivers installed. This will mean that you need to install the SATA drivers when the XP installation starts. You need to watch for the message early on that asks whether you want to install RAID drivers before installing XP. Then install the SATA drivers.
Suggested steps:
1) Ensure that your old IDE drive is set to boot in the BIOS and boot from it to check.
2) Shut down and connect the SATA drive.
3) Boot into the old XP again and it should detect the new SATA drive. Ensure that your HDD controllers in the Device Manager show a SATA controller and not just the generic PCI IDE controllers.
4) Partition the drive, then reboot
5) Start the XP installation, and have your SATA drivers ready. I'm unfortunately not sure whether XP is clever enough to allow you to have them on a CD though. It may demand a floppy disk, which is horrible.
I followed the same upgrade as you did by partitioning my new drive whilst booted into my old IDE. Since both were Seagates, I used the amazing old Seagate app called DiscWizard. They've now stopped providing the old version, instead providing an Acronis package that doesn't come anywhere close to the old one.
The previous version allowed me to duplicate the contents of my old XP partition to a bigger partition on my SATA drive and even set it to be bootable! Since I'd installed the SATA drivers on the old XP in order to partition my new drive, it booted fine and immediately used the correct drivers. It sucks majorly that Seagate have removed this sweet tool.
(rant-mode-off)