Some suggestions might be to create a SP2 slipstreamed install disc, and stick a firewall program on there if you're not using a router or XP's firewall.
The SP2 slipstreaming saves some time on installing updates, and the firewall ensures you don't get nailed with spyware while you're waiting to install the post-SP2 updates.
Outside of that, it sounds like you've got everything pretty well covered.
What do I need to do to prepare to reinstall Windows XP? I already backed up all of my drivers and the files I want to keep. I also know I will need to reinstall all of my programs. Is there anything else I should do to make sure my reinstall goes smoothly?
I have some spyware I haven't been able to get rid of, lots of programs hogging up my system that I don't need, and some annoying system errors. I've had my computer for two years so I figured it's time for a reinstall. I'm using the recovery disks that came with my computer - XP service pack I.