I've been running an Acer laptop (in addition to my Mac) since July of 2000 with Win98 and have never had to reformat, reinstall the OS or take any extreme measures.
Check out some of the other threads on adware/spyware for some good alternatives to reformatting.
I'll wager your machine is loaded with adware/spyware with a couple of virus's, trojans and worms thrown in.
First and foremost, instead of reformatting, run the XP update and make sure you have all the most recent patches. Make sure you keep it updated. Bill and the boys are now making those patches and fixes available once a month, so check early and often. You can load up your machine with all the firewalls, antivirus and antispyware software there is, but it won't do you any good unless you keep the OS updated. It's the holes in the operating system that are being exloited by this stuff.
Next...a good firewall. Activate your XP firewall. ZoneAlarm is one of the best freebies out there. If you're on a tight budget, get it and keep it updated.
Anti-virus...again a freebie...AVG at grisoft.com. It's as good as any of the biggies like Norton or McAfee. Again...keep it updated.
Anti-adware/spyware...being overloaded with this junk will slow your machine to a crawl. I work with this combination on a daily basis:
Spybot S&D -
http://www.safer-networking.org/
AdAware 6.0 -
http://www.lavasoftusa.com/
CWShredder -
http://www.spywareinfo.com/~merijn/index.html (standalone that deals only with CoolWebSearch software)
HijackThis -
http://www.spywareinfo.com/~merijn/index.html
They are ALL freebies for home use...
One more thing on these programs...all together now...Keep Them Updated!
Now, before you go downloading and running this stuff willy-nilly, check out the following sites, especially the forums, for information on how to use them. For the most part, SpybotS&D, AdAware 6.0 and CWShredder are pretty straight forward, but...
WARNING - HijackThis is a great program, however it deals with the registry and you can get into a lot of trouble if you're not careful.
http://www.spywareinfo.com
http://boards.cexx.org/
http://forum.gladiator-antivirus.com/index.php?showtopic=8050 - adaware
http://forums.spywareinfo.com/
http://www.wilderssecurity.com/index.php?
http://www.computercops.biz/forums.html
http://www.doxdesk.com/parasite/
http://www.staff.uiuc.edu/~ehowes/soft6.htm - University of Illinois at Urbana-Champaign
Two other sites
www.pestpatrol.com and
www.kephyr.com both have good software available, but their real value is their listings of adware and spyware.