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Recovering the system to its original factory condition is a straightforward process with few interactive requirements. Note that the Microsoft® Windows® XP Home Edition and Microsoft® Windows® XP Professional Edition Setup procedure is slightly different.

Insert the Product Recovery CD-ROM and reboot the computer
A message appears instructing you to hit any key to boot from the CD, do so. After pressing any key, you should see a message about Setup inspecting your system. If you don't, simply restart the system and repeat this step.

Initial Setup
In the first stage of Setup, you will see a series of blue and gray text-based screens. In the first step, you will be asked to press F6 if you need to install any third-party or RAID drivers.

Setup will load the files it needs to start a bare bones version of Microsoft® Windows® XP. This may take a few minutes.

Welcome to Setup
In this step, you can set up Microsoft® Windows® XP, launch the Recovery Console (another, more complicated system recovery tool), or quit. Press ENTER to continue Setup and it will examine your hard drives and removable disks.

Read the license agreement
Next, read the license agreement and Hit F8 to continue.

Choose an installation partition
This crucial step lets you choose where to install Microsoft® Windows® XP. On a clean install, you will typically install to the C: drive. Setup will show you all of your available disks (in this case, just one) and let you create and delete partitions as needed.

Select the file system
If you created a new partition, or wish to change the file system of an existing partition, you can do so in this step. The NTFS file system, which is more secure than FAT, is recommended.

System File Copy
Setup will now copy system files to the system/boot partition(s) you just created. This will allow the PC to boot from the C: drive and continue Setup in GUI (Graphical User Interface) mode. When the file copy is complete, Setup will initialize and save your Microsoft® Windows® XP configuration. It will then reboot your PC.

When the system reboots, you will probably see the "Press any key to boot from CD" message again. If this happens, do not press a key: Setup will now boot from your C: drive. In the event that you cannot prevent the CD-based Setup from reloading, eject the CD and reboot. Setup will ask for the CD when needed.

GUI Setup begins
Once the system reboots, you will be presented with the GUI (Graphical User Interface) Setup phase. Next, your hardware devices are detected. This could take several minutes.

Regional and language Options
In the first interactive portion of GUI Setup, you can choose to customize the regional and language settings that will be used by Microsoft® Windows® XP, as well as the text input language you'd like. Users in the United States will not normally need to change anything here. Click Next to continue.

Personalize your copy
Now, enter your name and, optionally, your company. The name you enter is not the same as your user name, so you should enter your real name here. Click Next to continue.

Enter your product key
Now you must enter the 25-character product key that is located on a sticker found inside the case's front door or under the laptop. You cannot install Microsoft® Windows® XP without a valid product key. Later on, you will be asked to activate and optionally register your copy of Microsoft® Windows® XP. Click Next to continue.

Enter a computer name and administrator password
In the next phase of Setup, you can create a name for your computer (which is used to identify it on a network) and, optionally in Microsoft® Windows® XP Professional Edition only, a password for the system Administrator, the person who controls the PC. Setup generates a random name for your PC, but renaming it to something you can identify with is recommended.

After Setup is complete, you can provide a better description of the PC too (like John's desktop computer). Click Next to continue.

Supply your date and time settings
Next, you can supply the date and time, which are auto-set based on information in your BIOS, and the time zone, which is set to PST by default. Change these as appropriate. Click Next to continue.

Network setup
If you have a network card or modem, Setup now installs the networking components, which include the client for Microsoft networks, File and Print Sharing, the Quality of Service (QoS) Packet Scheduler, and the TCP/IP networking protocol by default.

Choose networking settings
A. In this phase, you can choose to keep the default settings (recommended) or enter custom settings, it's generally best to leave it as-is, unless you have specific needs dictated by your ISP or network. Note that Microsoft® Windows® XP doesn't include the legacy NetBEUI protocol out of the box. If you want to use this protocol, you will need to install it later from the Product Recovery CD-ROM. Click Next to continue.

B. Microsoft® Windows® XP Professional Edition only:
Enter workgroup or domain information
In Microsoft® Windows® XP Professional Edition only, you will be able to select a workgroup or domain name next. Microsoft® Windows® XP Home Edition doesn't work with Microsoft® Windows® domains, however, and Setup will automatically supply the workgroup name MSHOME, which you can change later. The default workgroup name in Microsoft® Windows® XP Professional Edition is WORKGROUP.
Click Next to continue.

Setup completion
From this point on, Setup will continue to completion without any further need for interaction. Setup will now copy files, complete installation, install your Start Menu items, register system components, save settings, remove any temporary files needed by Setup, and then reboot. Again, you will probably see the "Press any key to boot from CD" message on reboot. If this happens, do not press a key, and your new Microsoft® Windows® XP install will boot up. You can remove the Microsoft® Windows® XP Setup CD now.

Microsoft® Windows® XP Professional Edition only:
First boot. You'll be greeted by the Microsoft® Windows® XP Professional Edition splash screen on first boot. The splash screens for Microsoft® Windows® XP Professional Edition and Microsoft® Windows® XP Home Edition are subtly different.

Change display settings
Users with CRT monitors and some LCDs (such as laptops and flat panel displays) will see a Display Settings dialog appear, which asks whether you'd like Microsoft® Windows® XP to automatically set the resolution. This will generally change the resolution from 800 x 600 to 1024 x 768 on a CRT monitor, or to the native resolution of an LCD display. Click OK and let Microsoft® Windows® XP change the resolution.

Then, accept the settings if the screen display changes and can be read. If you can't see the display, it will time out after 30 seconds and return to the sub-optimal 800 x 600 resolution. Click OK to accept the screen resolution change.

Welcome to Microsoft® Windows® XP
Now, you are presented with the Microsoft® Windows® XP "Out of Box Experience," or OOBE, which presents a wizard to guide you through the final set up of your PC. Click Next to continue.

Network setup
In the opening OOBE phase, you are asked to set up your network/Internet connection, which is required for activation and registration. If you selected the default networking configuration during Setup and know it will work (because you're connected directly to a cable modem, or are on a local area network), then select Yes (the default). Otherwise, you can select No and then Skip. We'll assume that your network is up and running and select Yes. Click Next to continue.

Optionally activate and register Microsoft® Windows® XP
If you selected Yes in the previous step, you are asked if you'd like to activate Microsoft® Windows® XP. Activation requires a connection to the Internet, but you can perform this step later if you want (Microsoft® Windows® XP will remind you of this fact every time you boot the machine until you do so). Select Yes, then you are asked whether you'd like to register the product. Unlike activation, registration is optional.

Set up users
Now, you can set up the user names of the individuals who will be using the PC. You will want at least one user name for yourself, since you shouldn't be logging on as Administrator for system security reasons.

This phase lets you create up to five users. You may create more users later, or manage users, using the User Accounts tool in Control Panel. Click Finish when you are done creating user names. At this point, the OOBE ends and so does the installation. Click Finish again.

When you log in to the computer as the Administrator, you will have no security restrictions, making the file system vulnerable. Files could be lost by accident, crippling the Operating System.

Logon to Microsoft® Windows® XP for the first time
You're presented with the Microsoft® Windows® XP Welcome Screen for the first time. This will list all of the users you created, along with lame and randomized images. When you click on a user name, that account will logon and you'll be presented with the Microsoft® Windows® XP desktop.