When you select Classic Start Menu click Customize and click the Clear button "to remove records of recently accessed documents, programs, and Web sites."
Also scroll down the Advanced Start menu options and check the option: Enable dragging and dropping.
This should then enable you to make changes as you see fit.
I am new to Windows XP (Home version)...and I have two questions:
1 When using the "Classic Start Menu", can I set things up (as I apparently can using the regular "Start Menu" option) so that documents which I open are NOT listed at all on the Start - Documents menu?
2 When using the "Classic Start Menu", how can I move items on the Start - Programs menu into a new folder which I have created and put onto the Programs menu? I tried dragging items into the new folder, but this didn't work.
Any help would be much appreciated.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic