I had loads of problems when XP when I installed SP2 (software not working, random error screens etc) so I had to do the following to remedy the problems:

Try this:Clean install XP with SP1

When the install has finished and rebooted goto START>All Programs>Windows Update

When windows shows you the updates available, deselect the SP2 updates but install all the others

Reboot when prompted

When windows loads again windows update will then ask you to update to SP2 via the update pop up

Deselect the SP2 check box and click CLOSE

Windows will then ask if you want to install all the SP2 security updates without installing the actual service pack

Click YES

Reboot when prompted

This should clear up any problems with SP2, but you still have all the security updates.

Lets us know how you got on!