Firstly you can create a slip stream CD with SP2 this site shows you how.
As for clean install of SP2 see this MS article
Also best to read this article about best practice for partitioning your hard disk
I am sure you will find the best way is to clean install SP2 using the above partitioning rather than upgrade from SP1.
I'm in the process of building a new PC to replace my current one. I'll be doing a clean install on a new hard drive. I a have Windows XP Home disc and key, but it is old. It doesn't even have SP1 on it. I want to get the most out of my new system, so I'd like to know the best strategy for installing Windows XP. Should I find and use a Windows XP Home disc that already has SP2 on it for the install? Or, am I just as well off using my Windows XP Home disc that doesn't have any SP's, and then upgrading it using a SP2 disc that I received from Microsoft? My thinking is that perhaps an install of XP followed by an upgrade to SP2 will not result in a system that is as efficient as just using a XP disc that already has SP2. Speculation aside, does anyone have experience with this or know if someone has done performance studies to find out if there is a difference?