I have to disagree with Merkerguitars about system restore. It may not be perfect, but it has saved my computer from a re-install on many occasions. The error reporting can be ditched, as can the indexing service, and many other features. I suggest googling for "windows xp tweaks" or something - that'll get you started.
With cable modems, you generally only have to set the network card to obtain an IP and DNS automatically. Do turn off file/printer sharing on that card, though - it's a security hole.
Privacy and XP: you have to register your copy with Microsoft if you want to use it for more than 30 days. Well, if it's an official version anyway. That's the main privacy problem: the computer sends a code (based on it's hardware) to MS, which then sends you an activation code back. Now, the privacy advocates asked: what else is being send to MS, huh??? Then there's error reporting, which sends data to MS too (but asks you before it does), automatic updates (which is set to download without asking you, but asks if you want to install. Can be changed, though), and probably many others.
And one of the hidden features: the blaster worm... Either get yourself a patched installation CD, a patch on a disk (download it from MS, while still using winME), or install a firewall *before* plugging in the cable modem. If you just go with the flow, you'll most likely end up with a really annoying system: "shutting down in 30 seconds" just after startup.
