Yay, I was able to install 32-bit Fedora 20 with KDE on my old machine via netinstal CD, even in less than an hour. So far, runs fine, although certainly not blazing fast.
I think the problem was that my optical drive is somehow limited in what it can do with DVDs. I very vaguely remember that, I think, it can only play movies from them. For sure, I couldn't mount the Fedora DVDs, but I'm not sure whether Windows XP is supposed to be able to do that anyway.
Also, on closer look, the entry "removable" in the BIOS boot sequence did not, as I first assumed, refer to USB drives, but to the floppy disk drive.