After rereading your post, I'm a little unclear as to the order I need to do these things in. Can you clarify if this is the correct order?
1. Reinstall Windows
2. Download/install NET Framework (version 2.0 I assume)
3. Download/install Windows Installer 3.1
4. Goto MS and search for updates and download/install the recommended updates (including SP2)
5. Install my drivers and software.
Is this the correct order, and are these the correct versions I need to install?
You mixed up the order there for sure. Following a clean install of Windows you would want Net framework 1.1 to go on first mainly that is required by many older programs run on XP. The newer 2.0 version won't simply replace the request for 1.1. The newer 2.0 and 3.0 will be seen along with the total amount of updates. The latest 3.5 is optional.
When first going for the updates the Installer 3.1 is the first thing you run into when not using the automatic updates. You have to see that go on and restart the system and then return to the update site for manually selecting which ones you will want to see go on.
Often the automatic method will see a driver set go on you won't want. But then one motor mouth wouldn't let you know about why it is often better to have the automatic update feature off if one or more problems are being seen with a newer set of drivers. Those are problems that come up at times with video, sound, and other expansion cards.