There is a good guide at lifehackers with a rather large title: “How to format your hard drive and install Windows XP from scratch“. The article lists the obvious things that you need which are: A pc, a windows installation disc, other software that you would like to install, optional up to date drivers for your hardware and a (optional) backup internet connection to download drivers / other software in case of emergency.
The guide is divided into eight steps starting with, guess what, step 1: Backup your data. I would never install a operating system without backing up my data before. Unforseen things can and will happen. The guide is about formating and installing windows, therefor making a backup should not be a question here. After backing up your data you are lead through the other steps: Formating your pc, installing the operating system, installing up to date drivers for your hardware, updating the windows operating system and finally installing additional software products. Fine guide, good if you´ve never done it before.
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I’m going to format my windows on this very moment. So I remembered about this article and decided to check it out, before I proceed.