I am running XP Home updated to Service Pack 3...and this system is as stable as can be. CFS2 runs like a champ!
XP comes in a few flavors: Home, Pro, Media Center. Pro, from what I understand, is the best version of XP, and contains some features that the others do not and is the most stable. Media Center has things in it geared toward using you computer for photos, movies, music. My sister-in-law has XP Media Center and I hate it...but then again, it could simply be her computer I hate.
There is nothing wrong with Service Pack 3....nothing at all. It makes XP more stable, more secure. The key to installing SP3 is to do it manually...that is do not allow Windows Auto Update to install it...actually, I never allow Windows Update to do anything automatically. My sister-in-law was one who becried SP3, saying that it would crash your system, that it would not install. And once I told her to stop being a lazy computer user and to install it manually, she quickly changed her tune.
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