I pretty much did that ( clean install ) with my XPS Gen 1. I first looked at the device manager and got as much information as I could about what components were in my system and gathered all the necessary drivers. I created a Ghost image of the system then used Partition Magic to create an OS partition ( 10 MB ) and a data partition ( ~48 MB ). I created ANOTHER Ghost image after I made sure the machine still worked after doing the partitions. I have an external USB/FireWire HD, so it was easy for me to get the backups off the XPS. If something goes wrong, you can just "ghost" it back to the way it was before you honked it up.
After doing all that, you are ready to do a proper repartition / reformat / fresh XP Pro SP1/2 install then install any drivers that were not on the XP CD. After all the basic stuff is installed, create a Ghost image. Install favorite apps, games, utilities and make ANOTHER Ghost image. Burn these both to a DVD and put in a safe place. Create additional images as necessary ( usually monthly ).