Clean Up After WinXP SP3

[Welshjim]

rwinegar--

if SP3 is mostly an accumulation of previous MS updates

I think the "previous updates" thing has been overplayed by MS. When you installed SP3, if you were at the PC you would have seen that many, many files were uninstalled, and then new, updated versions were installed. At least that was my experience and I already had all Windows Updates "up to date".
(For example, you will no longer be able to uninstall IE7 if you installed it over IE6 but before installing XP SP3. If you want to uninstall IE7 you will now have to uninstall SP3 first. Otherwise you would have many incompatible files between IE6 and SP3.)
Concerning the blue names, in windows explorer Tools|Folder Options|View tab there is a setting "Show encrypted or compressed files in color".
Black=Normal, Blue=Compressed, and Green=Encrypted
The $ntuninstall...$ and $NtServicePackUninstall$ folders are for individual Windows Updates. They contain the files necessary to uninstall the Updates. (They are not the files for the Update, itself). After a few months if you feel you will never want to uninstall the Updates then, yes, you can delete them.
The actual SP3 files are in C:\WINDOWS\ServicePackFiles\i386 as mentioned earlier. DO NOT DELETE OR REMOVE THOSE FILES.