When you have installed XP it will then set up hardware for you, some of the hardware it find generic drivers for, others it will ask for the drivers thru the add new hardware wizard that comes up. Once all these have been set up and the XP install is finished you can then go thru and tidy up, installing the correct drivers thru device manager from your backups. I'd start with graphics. Once all the drivers are in then do the service pack. Your BIOS will be left alone.
Changing the file system to ntfs should be better than the old fat32.