1.) Back up the important data on the computer.
2.) Format the hard drive
3.) Install Windows XP Home
4.) Get updates from windowsupdate.com (Includes .NET Framework 1.1)

In my experience upgrading from one software product to another,
including operating systems, is never perfect. It's ALWAYS better to
start from a clean slate! :-)

Let me know how it goes.

I installed the .NET framework 1.1 SP1 and for some very strange reason on a
reboot it takes exactly 3 minutes to "come to life" once the desktop is
loaded.  This in on a new WinXP SP2 system with nothing loaded except VS
.NET 2003 and Office 2003.

Once it comes to life everything works fine.  The only items that don't load
while I'm waiting my 3 minutes is the Office Drawing Pad, Hand writing,
Speech tools, and Microphone (actually not sure if these are Office 2003 or
Visio 2003 components).  When the PC comes back to life these items will
appear (next to my sys tray).  So, I suspect those Visio or Office 2003
components might be the culprit of incompatibility with .NET framework v1.1
SP1.

I did NOT have any problems with either until installing framework 1.1 SP1,
framework 1.1 worked fine.

I hope Microsoft take a serious look at this.