It may be you have 2 xp os's on your hd and if they're on same partition that isn't good. You can edit the boot.ini file to stop 1 xp from working. (post contents of boot.ini here to edit).
If you don't need data it's best to start from scratch, format and install new xp. If you need to keep your data you'll need to get a third party partition software like Partition magic to create another partition 1st.
The xp the shop gave is an oem and not a full version, hence not being able to update to sp2.