Santa came through and got me a portable DVD drive. I booted up with the recovery disc that came with the netbook. However, it wanted to RECOVER the XP version that was supposed to be on the hidden partition on the HDD. It did not allow a CLEAN installation from the CD.
I gave up on the EeePC CD and just booted with a regular Microsoft XP OS CD that I had from another computer. That booted fine and did a clean install with no problems. I now have my netbook back in normal operation.