Only if you connect that computer to the Internet is it important that you update to SP3. As for your other problem, when is the last time you updated your video drivers?
I have Windows XP Media Center 2005 Edition SP2 OS. It seems to me that if I don't update my computer to SP3, I cannot get security updates from Microsoft anymore. This is the second time I tried installing the Windows XP SP3 updates. For the second time, I had experienced ATI video bios poller client: ATI2evxx.exe - Application Error. Is it really necessary to update to SP3? If it is, what do I need to do to fix the problem? I have a Radeon X300 Series. I would appreciate your input.