Welcome to G2G Aukake
First off, if the only reason you wish to upgrade the hard drive is to provide more storage space, then you may be better off with an external hard drive instead. This would allow you to keep your current drive intact & running windows, and just use the external drive for file storage i.e your documents, downloads, photos, music etc.
If you did decide to do this, then you could simply move your 'My Documents' folder to the new drive. To do this all you need to do is right click on the 'My Documents' icon on your desktop, select 'Properties' then click the 'Move' button. Browse to find the new hard drive (This may be called drive 'E' for example), then click on the 'Create new folder' button to create a folder for your documents & click OK. When it asks you if you wish to move your current documents to this new folder, click YES.
If you do wish to replace your current drive all together however, then read on....
When Dell say your system takes a 1" drive, they mean a 1" high
drive. The 3.5" you see refered to, is the width of the drive. Some older IDE drive may have exceed 1" in height, but I'm certain no modern drive does so it should physically fit ok.
The main thing to watch for when buying a replacement drive, is the interface it uses - i.e. SATA or IDE (also known as ATA, PATA or EIDE). SATA drives will not
work in your system, so make sure you get the IDE type instead.
There is an issue with internal hard drives larger than 120GB with some older machines (i.e the system won't recognise drives larger than 120GB), however I don't think
this will be a problem with yours. NB This limitation does not apply to external USB hard drives.
In terms of getting XP on to the new drive, then creating an image of your current drive & restoring it to the new drive would certainly get round the problem of no XP install CD. It would also mean of course that you won't lose your programs, documents etc either.
The problem with that method in your case is this:
To clone your current drive you are going to need both hard drives connected at the same time. After cloning is complete, you can remove the old drive and replace it with the new one. Due to the lack of space in your PC, I would suggest the best way of doing this would be to temporarily remove your CD/DVD drive & pop the new hard drive into the bay in it's place & connect it to the ribbon cable that your CD/DVD drive was using. This should allow you to boot from your original drive and be able to access the new one.
Probably the best software for cloning your drive with is Paragon Drive Copy:Paragon
You may need to partition & format the new drive first before cloning. If so, just ask us for instructions on how to do this.
One final recommendation: whatever type of drive you decide to get (internal or external) I would recommend Seagate drives as your best option as apart from being very good, they also offer a 5 year warranty on all their internal drives and it seems most, if not all, their external USB 3.5" drives as well.
I noice that geeks.com don't seem to stock many Seagate external drives & what they do have are expensive. You may want to consider buying direct from Seagate or from another online store altogether as they may be cheaper.