I am 99% sure you need XP, but they are all Windows SP3 fixes.
The install should be done directly after a reboot and followed by a reboot. I would suggest that you run "chkdsk c: /r" prior to the service pack install to make sure the hard drive is working correctly.
Verify that you have at least 10% of the drive space free and then go for it. The upgrade is usually painless and takes 30-90 minutes on average.