That sound decidely like my machine from the MB spec (may be a little different!)
When you create the RAID it will delete all data on the existing discs, and this is often a good guide as to whether it has worked.
For starters, is the BIOS set to RAID 0 configuration? If so, you need the drivers for Win XP Pro so that you can install them during the Win XP installation.
Early on in the installation you should see a prompt to "Press F6" if you have "external controllers" (or something like that). Select yes, and then when it prompts you, provide the drivers on a floppy. You should not have to do too much more than that.
If it goes according to plan, you should not be able to see the two separate drives, but instead have one 320GB drive, probably labelled C:
Where is your system saying that the RAID is working properly?