Well, I'm not sure if the Aspire PQSERVICE partition is exactly the same as my TM8104, but...
When I first got my system, the drive is partitioned like this:
1. Primary PQSERVICE partition, type 12h
2. Primary ACER partition, FAT32, type 0Ch
3. Extended partition, type 0Fh
... Logical ACERDATA partition, FAT32
If you get Alt-F10 to work, it will change partition 1 to type 0Bh (or 0Ch), and it will hide partition 3 by changing it to 1Fh. Booting the PQSERVICE partition hides partition 3 just in case any logical partitions are NTFS. The Win98-based PQSERVICE boot will go "nuts" if it sees NTFS partitions. Also, don't press Alt-Ctrl-Del or power off while running the PQSERVICE boot - it will leave your extended partition hidden. If you exit the PQSERVICE recovery software normally, it'll fix the partition and then reboot clean.
Also, PQSERVICE boot expects it to be in partition 1 (only), and it also expects another single primary FAT32 partition at slot 2. You can have any extended partitions (Fat32, NTFS, etc) as PQSERVICE doesn't care (because it marked your extended partion hidden so all the logical partitions are hidden as well).
In my TM8104 BIOS, there's an option called D2D enable. This must be set for Alt-F10 to work.
Also, if you re-installed WinXP, it would have overwritten the MBR (WinXP tends to do that nasty). This means you've lost the Acer-specific MBR code (unless you imaged the drive before installing WinXP). The Acer-specific MBR is what "notices" Alt-F10 and changes which partition to boot. You most likely now have the WinXP MBR code, which doesn't check for Alt-F10, so nothing will happen.
If you still have your PQSERVICE partition, and want to boot it, you still might be able to. You'll need a bootable CDROM (or bootable USB floppy drive) with Win98 command prompt and some utilities, like PTEDIT.
Note that PQSERVICE will NOT work if your partition 2 is now NTFS - it must be FAT32 for PQSERVICE to work correctly. (Note that partition 1 is hidden, and partition 2 is your OS, typically C: drive).
Once booted up in a DOS floppy or CDROM, you'll want to change the partition type of PQSERVICE from 12h to 0Bh. Also, you'll want to remove the boot flag from partition 2 and set partition 1 (PQSERVICE) to be bootable.
Now, if you reboot the laptop normally, it SHOULD boot the PQSERVICE partition. At this point, be careful, as I'm not sure how the Aspire PQSERVICE partition is setup, so you many want to do a full backup before trying to boot the PQSERVICE partition.
Hope that helps,