It's totally necessary. But not a big deal. I remember old Win95/98 days when you could not go more than 1 year without format c:
Don't forget Windows ME, although it seemed like it needed it more often.
What no one has mentioned and the reason for the BSOD's is due to drivers for your old hardware. That's what Windows is loading and almost certainly why it blue screens.
Edit: I see Alvine mentioned them.
A clean install is your best bet.