With no floppy drive to use DOS to format the drive and get rid of Home Basic could you
tell me what to use? Would the new install just overwrite the old OS? One more thing, can
McAfee be backed up and reloaded or must I download a new program and begin the
updates all over again?

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If you are doing an inplace upgrade it will keep your current programs and settings and McAfee will remain installed on your system. But if you are willing to do a clean install it gives you the choice to clean the hard drive and install. This will wipe out everything on your HDD and do a fresh install. Be careful to backup any data before you do a clean install.

you dont need a floppy

you can format + partition from the installer itself

its the same in xp sp2

And no you can't back up mcafee then put it on the new system if you have a current subscription you can download and install on the new system. to keep your current setting do an upgrade to ultimate

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