But from the sounds of things, it'll probably be the fastest, probably easiest too. Depending on how you want to define best, it may well be the best.
A sort of checklist of things you'll want to do to prepare for all of this.
1: Make sure you have all the restore CDs, particularly the Windows restore CD, or something that will install Windows.
2: Make sure to locate, and have handy, a copy of all the drivers you'll need. At the very least, make sure you've got network card or modem drivers so you can download the rest.
3: If you haven't already done so, I'd strongly suggest making a SP2 slipstreamed install CD. A quick Google search should get you more info on the subject than you could read in a lifetime.
4: Make a backup of any documents you don't want to lose. Only worry about documents. Programs and settings are a lost cause.
5: Before connecting to the Internet, be sure that XP's firewall is switched on, or that you have installed a third party firewall.
6: The first thing you should do, once on the Internet, is start downloading updates from Windows Updates.
7: After doing #6, I would strongly recommend downloading Mozilla Firefox, and deleting the Internet Explorer icon from the desktop and Start menu, so that it's never used by your parents.
8: After #7, if your parents use Outlook/Outlook Express for email, download a copy of Mozilla Thunderbird and delete all icons for Outlook Express.
9: Make sure automatic updates is turned on, and it is set to automatically download and install updates.
While #7-9 can be considered optional, they will dramatically increase the odds that the system will remain stable and usable for a considerably longer period of time.
The actual formatting and reinstallation process is really pretty self-explanatory if you read the on screen instructions. The place most people get tripped up at, is not having all the drivers or installation discs for other programs they had before. If you run through my list of things above, you should find the process rather simple.
And if ever in doubt, every floor in every dorm on campus is likely to have at least one computer geek on it. Just walk into a random dorm, and start asking people who to talk to if you have a computer problem. If they haven't had all the good nature beaten out of them by dealing with serial whiner types, they might even offer to answer any questions you might have over the phone. It can never hurt to ask, and it can never hurt to befriend at least one of these people in case you ever find yourself in the classic college situation of it being the wee hours of the morning, you have a paper due the next day that you've put off until now, and something goes wrong with your computer.