Hm, it seems the first partition doesn't have a drive letter, but the second one has the standard C: one. I think it is okay to leave it, since I DO believe that only partitions with letters show up in Windows. Then again, the only formatting I've done is on Virtual PC.
Also, did the computer restart with the Windows XP Installation wizard? If it is stuck like that, try rebooting it yourself. It SHOULD show up, according to
this walkthrough.