If you reformat, the only thing that stays in tact are the partition table and other partitions.  If you're harddrive doesn't have more than one partition, you have nothing to worry about.

After you reformat, you just boot up from the XP/Vista CD.  If you want lightweight however, I _strongly_ suggest nLite.  Install nLite onto your current Windows installation.  nLite, after started, will ask you for your Windows XP CD - give that and it'll do whatever it needs to.
After that, remove all the unnecessary components from the list, like Internet Explorer (since you're using Firefox; note that you should keep the Internet Explorer Core rendering engine) and Windows Media Player, MSN Explorer etc etc.

It'll compile an ISO for you which you just burn, then use that to install Windows.  If you have a x64 CPU, I suggest XP x64, it's much faster and more stable (based off Windows Server 2003).

If you must go Vista, use vLite to cut out the poo poo.