Windows XP Service Packs

I was wondering, when installing Windows XP Service Packs, do they need to be installed sequentially, or can SP2 be installed right on top of a fresh XP install? Do the Service Packs cover updates found on Windows Update, or are they just their own "big fixes"? I've noticed that when using Windows Update, Service Pack 1 will not show up as an update until a sizable amount of other updates have been installed, can I install the Service Packs before using Windows Update to install the many other critical and recommended updates? Or, should I install all other shown updates on Windows Update before installing the Service Packs?

 

SP2 is cummulative up to the point it was released. So the best order of operations is install SP2 first, then pick up whats left from Windows Update.