Just gave this a good read through, and it seems to me that the most helpful piece of advice of all hasn't been posted in the topic!

Service Pack 2 should be taken seriously. It's virtually an OS upgrade, after all. The service pack replaces just about all of your Windows installation core files.

If your system has problems before you install it, it's most likely they'll be magnified afterwards, not fixed. That's the case with any Windows upgrade, and it holds true for problems and corruptions in your Windows install that you haven't even noticed the symptoms of yet. There's no point to blaming the Service Pack if that happens, because the problem was there to start with.

The best way of all to approach updating to the Service Pack is to format, install fresh, and start over with SP2 installed and working. And if you find conflicts when you reinstall some software program or other, then you know where the blame lies, don't you?