I believe you will have to use the F6 procedure to boot off the Silicon Image controller. Windows can install all drivers for all of your devices after it's up and running with the exception of one: The storage controller driver. Windows must have the storage controller driver for the boot device installed using F6 during installation if the storage controller is something that the Windows CD doesn't have drivers for.
In most cases of Windows installation, it is not necessary to use F6 because you are booting from a chipset that has standard IDE controller support and your boot device is on the IDE controller. This applies for all Intel chipsets/south bridges and most VIA, nForce, SiS chipsets as well -- they can all emulate a standard IDE controller, so Windows can boot with no special drivers installed. This is also the case if your storage controller is a common one that Windows has drivers on the CD for (like an Adaptec 2940UW SCSI controller).
However, the original poster in this thread is using an Asus A7N8X-E motherboard. This motherboard uses an nForce2 chipset. The south bridge of this chipset contains 2 standard PATA/IDE channels, but no SATA. The SATA connectors on this motherboard are connected to an embedded Silicon Image SATA controller.
However, Windows does not have the drivers for the Silicon Image SATA controller on the CD.
If you want to boot off of a hard drive connected to the Silicon Image ATA controller on this motherboard, you have to install the Silicon Image SATA drivers during Windows installation using F6.
So, your procedure is as follows:
1. Download the Silicon Image SATA controller drivers for Windows XP for your motherboard from the Asus website.
2. Copy the driver files to a floppy disk. I downloaded the package myself, all the files you need are in the root directory of the folder after you unzip it. (silsupp.cpl, txtsetup.oem, si3112r.cat, si3112r.sys, si3112r.inf, siwinacc.sys, readme.txt, silsupp.vxd).
3. Connect your 320GB drive to the SATA connector on the motherboard. Make sure the BIOS settings are such that the Silicon Image SATA controller is enabled. Boot the Windows XP CD to install.
4. Press F6 when the text-mode installation says at the bottom "Press F6 to install a 3rd party SCSI or RAID driver".
5. It will prompt you to insert the floppy you made.
6. Insert it, it will read the oemsetup.inf file and copy the driver files off the disk.
7. You will know you're successful, because the 320GB drive will appear as a blank drive to install Windows on. If Windows replies that it can't find any storage devices connected to your computer, the driver didn't install correctly (probably you don't have all the necessary files on the floppy).