I could've used one of these when I got my XPS2. I found the whole process quite simple though, so I'll do my best to help you out.
1. Go to
this page and download the drivers you need for your specific hardware (video, wireless, etc.). You'll also need the Intel Mobile Chipset, the Conexant drivers, the Glidestick drivers, the Broadcomm driver, and the Notebook Systems Drivers.
*Note: you may not need to download anything at all depending on whether or not Dell sends a resource CD with your system. I personally did get a resource CD, but others have said they haven't. To be safe, I would have all these files downloaded and burned onto a CD before your system comes.
2. When your system arrives, I'd recommend playing around with it to make sure everything's functioning properly before doing the format.
3. When you're ready to format, reboot the machine and repeatedly hit F2 while the Dell logo shows to enter your BIOS. You'll have to navigate around in the BIOS to set your boot order. You'll need to set the order so you boot from a CD before the hard drive.
4. Before exiting, pop your Windows CD (which I believe is a green Dell CD that should be sealed inside your Windows XP manual. I think Dell calls it the Windows Reload CD or something like that). Save the BIOS settings, and exit. Your machine will reboot and the Windows installation repair prompts should come up. If they don't, you didn't set the BIOS to boot from CD first.
5. My system had three partitions when I got it. Some have reported doing different things, but all I did was format the largest (C:/) partition and install Windows there. The prompts should walk you through how to do this.
6. Once Windows is installed and you get to your desktop, you'll need to start loading drivers. If you got a Dell Resource CD with your system, put that in your CD-ROM drive and install it. All the drivers you need will be on the CD and you'll just have to click each one. There have been varying reports on what should be installed first. I'd recommend installing the Intel Chipset Utility first, followed by the Notebook System Software, then video drivers. After that, it doesn't really matter. If you don't get the Resource CD, simply put in your burned CD of all your downloaded drivers and start installing.
I was a complete newbie at this too when I got my XPS2, but it's really a simple process and it's increased the speed of my machine pretty dramatically.
Good luck!