The MAJOR problems that have been reported for WinXP SP3 have been:

1. An early release caused a failure to open Windows and put the computer into a constant/perpetual reboot cycle. This happened only with computers using AMD processors from only some OEM computer builders. The update website was "fixed" to detect computers with the problem CPUs and block download of SP3 to anyone affected. A real fix, to allow SP3 installation on those computers was promised; but I haven't seen a notice that it's in place.

2. Some antivirus programs allowed the SP3 installation to create temporary registry entries but blocked the cleanup deletion of the temporary entries. This resulted in "major bloat" (many thousand useless entries) in the Registry and crippled the machines. Microsoft blames the AV makers, but it appears that Microsoft presented the required "security certificate" when it opened the Registry to create the temps, but failed/forgot to show a valid cert when it re-opened the Registry (after reboot?) for the cleanup.

Invisible (mostly unreported changes) include:

SP3 includes updates to IE. If you have IE7 installed (or have the beta IE8 installed) when you run SP3 installation, you cannot uninstall IE7 after SP3 is installed. In Windows generally, you can uninstall an update to IE, but once you get back to the version that was originally part of Windows at your original Windows installation, the "first version" cannot be removed. SP3 makes IE7 the "first version" for computers that have it in place when SP3 is installed.

Since all Windows versions include IE, all IE separate installation downloads or disks are "updates." Running an IE6 installation disk/download can't "downdate" back to a version earlier than the one on the machine, and if IE7 is the "first version" (after SP3) there is no known way to revert back to an earlier version short of a complete reinstall of Windows from original installation disks.

If you have to reinstall from original disks that are not SP1 or SP2 versions, you'll have to reinstall from original disks, then download and install either of these before SP3 can be installed. SP2 includes all prior patches, so it would be preferred, but it can be an 800+ MB download. Even if you don't install SP3, critical patches since SP2 will be several hundred MB of download and install.

One Microsoft website implies that WinXP SP2 will not be supported after April 2009, which could mean that the SP2 download will not be available if you have to reinstall XP from disks that don't include SP2.

If your original WinXP installation/recovery disks don't include SP2, I would strongly urge that you download the SP2 update program and burn it to a CD. Put the CD with your original disk(s) so you'll have it if disaster strikes. Making the CD of the SP2 download "bootable" is recommended (for IT administrators) by Microsoft, but as long as you have an original OS installation disk that is bootable you can run the SP2 installation manually, so suit yourself about whether to make it run itself.

John