I did this about a month ago, and so far have had no problems whatsoever; the computer is runnig a million times faster.
Basically I found the start up/os cd's that came with the computer. You'll need these, because when you format the c/system drive, you'll lose the lot, and won't be able to load anything (The os will have vanished
)
All I needed to do was chuck the cd in the drive, and reinstall xp. I found that to be the easiest way, as it formats the drive along the way. I have a partitioned (sp?) drive, so it only formatted the system drive, and left the other drive alone. When I got back into XP, all I did was right click on the non system drive, and clicked format
(It should be an option on the menu that pops up).
Whatever way you decide to do it, make sure you back up your stuff, and be sure that you have your boot cd/xp cd around, otherwise you'll be stuck without an OS.
EDIT: gah, bchur83 beat me to it