Teobach is perfectly correct, however SP2 IS in the Add/Rebove Programs list, near the bottom, it dows not have a file size as it is a "remove only" addition, also you can turn on all the updates you have received (with the exception being the ones that are not supposed to be removed).
As far as a comple re-install and format is concerned, check your BIOS to make sure your machine will boot from CD - make that the first thing it selects.
Now, put in your CD and reboot, the computer will automatically search for the boot sector on the CD, once it's found it, let it go through loading the first set of files, then it will go to a black screen and ask you if you want to reformat (y/n), choose y, and let it reformat in NTFS. This will shif ALL parasites of whatevr nature from the drive - but it will also shift all pprogrammes and data that remain, so be warned. Let the programme install itself, then near the end it will give you some choices as to what you want, go through these - paying particular attention to the time and date and to the language used - set your own NOT American English.
Once it's on, then it will want a reboot and you can remove the disk and begin to re-load all your programmes. I suggest that if you have 2 disks, you reserve one for the O/S and main programmes, and the other for games and private data.
The first programme I would load is an anti-virus programme - youi won't be able to update until you get a 'net connection, so that should be next, once you have the ISP set up. log on, update your anti-virus system (and firewall) then go to system restore and create a restore point. Update MS to SP2, (I am assuming that the disks you have come with SP1 already on them), at this point download Ad-aware, Spybot S & D, SpywareBlaster and Ewido. Log off the 'net, run the anti-virus again, then reboot into safe mode and then run Ad-aware, Spybot S & D and Ewido, deleting every problem they find.
Now download SP2 and any other updates you need, you should now be back in business - stay away from those spyware sites in future.