Resetting my Macbook to Factory Settings

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I put in the install disk 1 and held down the c key while it was booting up. I went through and installed it to "Mac OS X." I had another option of installing it to "Macintosh HD." Why are there two? Should I have installed it to one and not the other. Also, after it had finished installing, it asked if I wanted to transfer files from another volume on this HD or computer or something. It had other options, but that one stood out to me. Did I not clear its HD (or HDs)? I wanted to rid the computer of all files. Did I do this or not? How do I do it? I wanted to reset it as if it were brand new out of the box.

Thanks