To be clear, reformatting itself doesn't really help anything. Installing Windows from scratch does help, simply because it eliminates all the background applications and widgets you've installed over the years. If you backup your system, reformat, and restore from your backup, you'll be right back where you started.
If you're trouble is really a poorly tuned hard disk Defragmenting and Error-Checking the hard disk will correct any problems that reformatting would address and you don't lose your data. You can get to these tools by going into My Computer right-clicking a hard disk and choosing Properties, then the Tools tab. Both take a while to run, Error-Checking especially.
If you decide to re-install Windows the next thing to do is be vigilant about not allowing background crap on your system. For example:
* When you install things like Quicktime or Windows Messenger go into it's options and set it not to preload when Windows boots and to actually end when you exit them (vs minimizing to system tray).
* Don't install programs like RealPlayer that don't allow you shut off their background compontent.
* When you install things like printer drivers only install the DRIVER, not all the utility and monitor garbage.
* Review your startup folder, figure out what is in there and delete any shortcuts you don't absolutely need running.
* Review all the icons in your system tray (bottom right by clock) and uninstall or deactivate anything you don't really need.
* Don't install cute freeware like Google Desktop search.
* When you are installing programs always choose Custom and make sure they are not adding any unneeded background apps.
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