zed3, there is a flaw in your logic:
all WAS working perfectly
How do you know it was working "perfectly"?
Have you updated your XP installation to SP1? You can check by right clicking "My Computer" and clicking on "Properties".
It is very advisable with a new OS such as XP to update it regularly since when Microsoft put (push) it onto the market it is still very immature. In your position I would do a full re-install over the existing set-up (you won't lose your settings) and get straight onto the Microsoft update Web-Site and let the beast be updated.
The several XP machines I administer get this treatment and I stay free of serious problems. But then I'm very careful not to try to install old programs that used to work on Windows 95 etc but which are not written for Windows 2000 or Windows XP.
XP is a great OS. If it's giving you grief, it's not the fault of the OS.