Installing legit copy of Windows to replace illegal one

hello there,
i baught a used pc which had a windows xp os on it. lately i started getting messages that the os is not legal and it's pretty annoying. since i have a genuine windows xp at home (from my old pc) i want to install it instead of the existing one. this arroused a few questions which i hope you will help me with:
1. since i don't want to format the hard disc is it possible to install without doing so?
2. if it is possible, will it delete all my programs and other personal data/settings (such as favorites, email on outlook express etc.)?
3. how can i find out what drivers i will need in order to install them after i'm done and where can i get them?
4. is there anything else i should think of before doing this that i haven't mentioned?

Why don't you make the hard drive from your old pc to become master HDD (on your old pc) and the hard drive from the new one make it slave and format it? If you need anything from the new one just delete its C-partition and leave the other intact. Logon to your windows, move what you need on your hard drive and then delete the remaining partitions one the new drive. Or if you need something on C-drive you can make this hard drive slave, logon, move things to your old hard drive and then - format the whole HDD. If I was you I'd do so. I can't explain it better, let's hope you've understood me.
And to make them master and slave all you have to do is to move the jumpers on the disks.

Suggest save documents, pictures, music. Then wipe drive, do clean install of legit OS.

As long as you have pirated copy of OS, you will continue to have problems. Did you not realize this when you got the computer?