I would certainly format - that way you can be sure that if you encounter any problems they are not related to the existing Win98 installation. It also is a good oportunity to clear out months worth of cr@p DDL files/temporary internet files and the other such stuff Win9x is so good at collecting.
Definitely do a clean install, makes things alot easier and you know its from "scratch", makes it easier to rule out problems in the future or during setup.
unanimous! hehe. clean install with ntfs, altho if u have space i would recommend making a FAT32 partition (new one, don't keep win98 one) for access from a dos boot disk during emergencies/bios/firmware updates.
<< Format in NTFS? Does that mean formatting/partitioning from the WinXP CD?
Can I do that using Windows 98SE StartupDisk? >>
Best way to do a clean install of WinXP is to boot from the setup CD. (You'll have to tell the BIOS to boot from CD. Then switch it back to its previous setting after you've completed the install process.) Read the setup dialogs as you go along. You can delete the present partition(s) on the drive and create and format new one(s) before proceeding with the installation.
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