Snipeye is correct.
However, you don't need Windows 7 if you don't want it. I found the Media Center Edition of Windows XP on TigerDirect for $100.
http://www.tigerdirect.com/applications/SearchTools/item-details.asp?EdpNo=2571833&CatId=672
It's the same deal as Windows XP, but the it's been optimized for media, such as music, videos, recorded tv, and photos, meaning it'll load those much faster than a basic edition of Windows XP.
Also, before you go off buying anything, do what bigrob said and call Microsoft. They may be able to help you if you can get Windows to install with a "trial version" where it'll give you 30 days to use it, then you need to put in a key and you may be able to get it working over the phone. Also, if your computer doesn't recognize the internet adapter you're using, it may give you that error until you get the driver for the internet adapter you use installed inside the operating system. If you have a USB Thumb drive or a CD Burner + a blank CD, you can put the driver on that (unpackaged, .exe launcher ready to install) on to the disk/thumb drive and install it by pressing the key they tell you to press for 3rd party software installs (like drivers!) and install the drivers for your adapter there to minimize problems.