1. You should always keep the floppy as first in the boot order, just in case you need if if the CD won`t boot. When the PC is booting up, if there is no floppy in the drive it will automatically boot from the CD.
2. It won`t make any changes to your current setup. When you are booting normally to the HD, if there is no floppy or CD in the drives it will boot fine to the HD
3. Here are a couple of great tutorials to help you reinstall XP. The reformat is included and is done by XP during the reinstall.
http://www.michaelstevenstech.com/cleanxpinstall.html
http://www.theeldergeek.com/xp_pro_i..._-_graphic.htm
Elaine