To clean everything off the C drive just boot up with the XP CD. You'll need to ensure that the system is set to boot from the cd-rom drive first in the BIOS. When XP setup begins it will automatically detect that there's already an OS installed, and it will tell you which key to press for your various options. These are the options you should go with:
1. Select the current C partition and tell XP setup to DELETE that partition.
2. Now tell XP setup to CREATE A NEW PARTITION on the unallocated space (the partition which has just been deleted)
3. Then tell XP setup to install Windows on that new partition. Windows XP setup will then first format the partition which may take a while, then it will start to copy files for installing Windows. When it's up and running, install SP2 which will beef up the security and will also bring Internet Explorer up to date -- (hasn't been updated since SP2). Make sure you switch the Windows Firewall on (SP2 update should prompt you to do that anyway), and install an antivirus utility. For good measure, also download and install the excellent and free 'Spyware Blaster" which automatically adds malicious sites to IE's block-list. Get it here and keep it updated:
http://www.javacoolsoftware.com/spywareblaster.html