Unlikely it is the motherboard . . .
Usually when Windows setup locks as you described it is because it lacks a driver necessary to access the disk. If the drive in the machine is SATA this will definitely happen with an original XP install CD because there are no SATA drivers on it (strangely enough, also true for the Vista install, although not so for later XP/SP2 install media). So this could be a red herring.
We need to double-check the error and the sequence. You turn on the machine, the bios loads, and then you get "GRUB . . . ". Is “grub” actually followed by those strange characters above? And it is after this that you get the “no system disk” error? If so, this suggests a corruption in how the boot loader was installed to the MBR.
Try this: Boot the DVD into Repair Installed System. Choose reinstall boot loader. Reboot.
If that does not work, then do this: Boot the DVD into the Rescue System, login as root, and then do:
grub
That will put you in the grub shell. Then do:
find /boot/grub/stage2
Grub should return: (hd0,1). If not, report back, else do:
root (hd0,1)
Grub should return “Filesystem type is ext2fs, partition type is 0x83”. If not report back, else do:
setup (hd0) (hd0,1)
quit
That reinstalls grub to the MBR with a pointer to find the kernel at sda2. Then to reboot the machine do:
shutdown -r now
If still not working . . . once again boot the DVD into the Repair System. Enter the Boot Loader installation dialog. Under the Boot Loader Installation tab, uncheck Boot from Master Boot Record and check Boot from Root Partition. Then click on the Boot Loader Options button, to the upper-right check the boxes Set Active Flag in Partition Table and Write Generic Code to MBR; click OK, click Finish. Reboot.
If none of this works, I need to know if you have a Live-CD or only the DVD. Also, I presume this machine had Windows originally installed - did you remove Windows? Is/was this machine equipped with a Windows recovery utility and/or partition?