"They will install Windows XP home edition for me. I guess it will come with Microsoft Works but I hear that is very basic"
Microsoft works is extra unless the company is throwing it in. You need to check.
If it's just personal stuff, "Microsoft works suite 2005" is what I have and am more than happy with it.
As for your security options thats what I have too. AVG, ZA and anti spyware programs, all the free ones!