Just some things to add to Tarekiths very useful post:
If you do choose to go down the Re-install the OS route - try out with miminal apps and utilities installed first.
I typically install as follows:
Base OS install (with SP2 and actvate)
Video/audio card drivers
Then goto windows update bring the machine completely upto date.
Disable any startup apps and servuces I know I definately wont need.
Check the basic ASIO, MIDI and minimal audio apps are working OK.
Configure windows update times to be non-instrusive, same with antivirus and anti-spware of you installed those as well.
Now I will image the machine. If you dont have a imaging tool (For eg Ghost), create a named system restore point. Leave system restore active - dont disable it - it can save your ass when everything goes horribly wrong after installing something
Now Ill install and check remaining audio/midi drivers for other devices, main audio apps etc ie bring the whole machine upto your normal DAW working set of applications and drivers etc.
Check it out, if happy, create another image or named restore point.
Finally I'll now start sticking all the other general working crap on that I need - Office 2003, Printer drivers, Visual Studio 2005 and tools etc etc, create restore point as I go along in case some part of it goes wrong/messes up the audio in some way and I need to roll back to the previous restore. As I am in complete control of creating the restore point up until this time, then I know exactly what I am restoring back to.
Also worth considering dual boot. My main DAW was installed as a dual boot - two hard disc partitions, Win XP+SP2 installed on each, and brought upto the first restore point above. My main boot is my general use PC. The secondary boot is very carefully controlled and is specifically for DAW use. In practise, I dont find much of a perf or reliability difference between my general setup and my optimised setup.