First Time Reformatting Questions!

Hello,

I've decided that it's finally time to re-format my computer, 2 years after I bought it. I want a fresh "out of the box" start so I've heard this is the best way to do it.
I have the Fujitsu-Siements Windows Media Center 2005 Recovery CD that came with this PC and have a few questions.

I came over this help topic: http://support.microsoft.com/kb/313348 and are those the steps I should follow for a clean start?

How do I know which type of partition I want:
Format the partition by using the NTFS file system (Quick)
• Format the partition by using the FAT file system (Quick)
• Format the partition by using the NTFS file system
• Format the partition by using the FAT file system
• Leave the current file system intact (no changes) ?

By deleting my current partition, I will delete all the files on the hard-drive , including Windows XP. After I create this new partition, I will be able to re-install Windows XP from my recovery CD, am I correct ?

Thanks

 

http://www.blackviper.com/Articles/OS/InstallXPPro/installxppro1.htm

This is visual guide for Windows XP from Black Viper's web site.