If you don't go the slipstream way, an alternative is indeed to -install your pre-SP1 XP on a smaller (than 127Gig) partition. -(download and) apply SP1a (or SP2) then SP3 (that's probably what your experts meant but a bit confused themself, see below) -reclaim the rest of your disc space for the C drive of your now updated system using (booting) GPartEd CD. You can't indeed use SP3 on top of your pre sp1 install. You can slipstream SP3 directly to an install CD but you can't apply it to a pre-SP1a running system. +SP1a is much more smaller to download than SP2. Warranty ? If your system came with a hidden "Recovery Partition", that recovery system would probably not work anymore after modification by GParted (and so no more software warranty/support) but this is not your case at all as you're buying a new drive that has nothing to do with your original system, any use is permitted. New drives don't even come with a partition! A pre-SP1 system is surely too old to be under warranty anyway.