How to fix the booting problem?

I have an old, assembled desk top loaded with win7 ultimate. It has got 80 GB hard disk and 1 GB RAM. Earlier there was XP. That time CD drive was not working at all. Subsequently I upgraded to win7. After few days suddenly I discovered that CD drive was working. I could burn files also through this drive. Though booting was not possible from CD. After few days suddenly, system stopped loading win7. I wanted to re install win7, but was not possible without the option of booting from CD. Whenever I tried to boot, one welcome screen and another screen came after one beep each and then it halts with a blank screen. I prepared a bootable USB drive with XP with an intention to install XP and thereafter upgrade to win7 (instructions for XP alone was available in the internet). After preparing the USB, I checked it in another system to see if it was working. In the BIOS there is no option to boot from USB. So I disabled all three boot options (Floppy, CD, HDD) and enabled “other” boot option and tried to boot from USB. Out of my nearly ten attempts, only twice, USB drive was displayed in the boot menu as a boot option, though it did not boot from it. Presently system does not boot either from HDD or from CD or from USB.(Floppy drive is not active since the relative cable is missing). My question is:-
1. Why should the boot menu display the USB drive only twice? Only in case of a loose connection such things can happen. I believe there is no question of any loose connection here. So either it should display or should not display at all.
2. Why does not the system boot? I have a feeling that perhaps there is a component which is responsible for detecting drives or booting in general was failing slowly because of which CD drive was not working (when XP was there) and there after it was not booting from CD and again there after it stopped booting altogether.
3. Someone told me that, in case of RAM failure, system will not start the boot process at all. Here since boot process goes few steps producing two screens and two beeps, perhaps it is trying to boot but why unable to detect the drives.
4. There are two separate cables for hard disk and CD drive. CD drive is primary and hard disk secondary. When I exchange the cables, it is reflected in the BIOS that is CD drive becomes secondary and vice versa. That means BIOS is recognizing the drives.
5. I tried with different boot order in the BIOS as well as by making the BIOS setting as default.
6. I tried the installation CD, so there is no question of whether the CD is bootable or not. Similarly if MBR is corrupt, it should give problem only for HDD booting and not for others like CD and USB. Then where is the problem?