So are you going to reformat your system, and install it again? If that's what you mean by wiping the system.
If you are going to format the hard disk, and install the system again from a scratch... then why not just use the XP CD to partition the drive. You can make a primary partition, install XP on it, and then you can make other partitions from within Disk Management, when XP has been installed. You can make an image of the primary partition, after installing XP, and then installing the required updates, and the drivers, and other programs that you want to be there.
Using a CD like UBCD to partition the drive is suggested, when the system is already up and running. Although, I don't know much about partitioning from a software, because I have never used it. But, if there is a simple way, why not choose it. Or, I may be misunderstanding something.
I still think, a wrong partitioning was responsible for the present state of your system, but I could be wrong.
Good luck
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