1:
from inside windows you can reinstall, but that would amount to upgrade, your shortcut's, program files etc will be saved, only problem is it just overwrites on existing sp2, messy for sure but might help if your sp2 is messed up (not your clean install)
[i'm pretty sure but just reconfirm, all your settings would be saved]
2:
for clean install, that is deleting your program files, windows etc you can boot from cd & do the install on same partition, your settings wont be saved,but your os is as good as new
in clean install you would have to reinstall everything from scratch.
p.s - in both the options your files & folders(stuff) are safe, they wont be deleted unless you format b4 installing.
can you also give reasons for why you want to reinstall.