Installing legit Dell XP Pro disc to fix illegal? XP Pro.

I have a Dell Inspirion 8600 I bought last May off Craig's List. It has XP Pro but the sticker on the bottom says XP Home. I don't get the pop ups that say it's not legal but I did the test and it said it wasn't. My laptop is starting to get REALLY slow these days and acting weird sometimes so I ran the Avast thorough scan (took 19 hours), no virus. Do RegCure thing regularly and spyware doctor, too. Didn't figure out I had a funky copy until I spent 2 days trying to figure out what to do. Went on Amazon and bought a disc from sTs Electronics. The ad said "Full Version not upgrade or academic, complete w/ SP2, will get all updates, legal, can register, WGA, etc. It also said "works on all Dells and is for Dell computers only" and there was a photo of a green disc, $39.95. Just ordered it, don't have it yet. I was reading another thread about fixing illegal XP Pro. I need to keep all my favorites and my Outlook Express stuff. Is this the type thing I can just type in a number to register and then it will take care of itself and all my stuff will still be where I can find it? Or is this something that requires taking all the stuff off and putting it back on? In the other thread people were talking about full versions and up-grade versions. Did I get the right thing? I'm not really good at this so if anyone answers can you speak slowly? I also was wondering about "Driver Detective" and if that might help?
Any assistance would be GREATLY appreciated!