Creating Backup Files

I have an old Windows XP computer, and it's pretty bogged up. I would like to format the hard drive, but I need to backup the important files I'll need. First, I'd like to know which important files are necessary for a file backup. Also, how will I know which ones are important for my computer? If I know the important drivers and software needed for a reboot, how would I go about putting these important files onto a CD or DVD?

After I've concluded the process of creating my backup files onto a CD, what is the step by step process to formatting my hard drive? Once hard drive is finished formatting, how will I use my backup files?

I would also like to put a new hard drive in the same PC. I have the hard drive, and it's from an old computer. What are the steps to putting it into my computer?