Cleaning hard drive on CPU

You can use any Windows XP disk, be it Dell or not - borrow one from a friend or family or work.

Make sure you have the windows licence key (sticker on the case, or in the booklet that came with the computer).

If you can't find the sticker, download "Belarc Advisor" and run that - it will give you a report with all the hardware/model/serial numbers as well as all licence keys for your software (Windows, office, etc). I print one out for every computer I own - makes things super easy after a crash. Print it out then nuke the machine. 

Boot off the CD, format the partitions, and install windows new. Sounds like a lot of effort but it really isn't - a couple of clicks and walk away. 

Also, just semantics but the CPU is a little chip inside the computer - nothing is stored on it.

Have you tried a basic De-Frag and cookie/ internet history clean out?  That alone if it's not been done in a while can help as a basic step while you're deciding how far you want to go. 

If it's a desktop you could also buy a new drive and just copy over what you want and keep the old one as a back up drive.  Drives are cheap. 

You can order xp discs if you don't have them.

Also, whenever I do what you're doing, I just get a brand new hard drive.  I know it's fresh and clean!

And then boot from CD's and install the new operating system.

LOL...posted at the same time...great minds think alike.

Depending upon  how mucked up it is, Option 2 or 3 will be easiest.

Windows XP stored the product key in plainly readable text in the registry.  

Use these instructions to retrieve it: http://pcsupport.about.com/od/tipstricks/ht/findxpkey.htm

Going to Win7 or Win8 is probably a better plan, however, there is no upgrade path.  You MUST wipe it all out and do a clean install.  Depending on what hardware is in your computer, though, this may not be the best option as your hardware may not be up to snuff to efficiently run Win7/8.

If you reinstall XP, make sure you take the time to apply all of the Service Packs, and do all of the Windows Updates.  Still, with those, XP is still a virus infection waiting to happen.

If you go this route, I'd look at Ubuntu 12.04 LTS over their latest version.  That will give you the longest period of updates / support.  The end-of-life for XP is sometime in 2014 I believe, and 12.04 Ubuntu will be a few years beyond that.  Also, I hate the default UI for Ubuntu now, it's really annoying, much like Windows 8.  After installing Ubuntu, you can switch to the classic UI by running the following command in a terminal window:  sudo apt-get install gnome-panel

Once you run that command successfully, you'll need to log off, switch views at the logon screen to classic gnome (which you have to choose by clicking on some silly graphic near the logon fields, it's not obvious) and after that you should be good to go.

You can start with the easy optimization stuff and go from there.  Choice 2 isn't a bad way to go since Windows in general.  Getting it to an "optimal level" could mean many things... maybe the PC doesn't have a lot of memory, aging power supply isn't supplying good voltages, etc. 

My suggestion is to reformat and reinstall after backing up any data you want/need.  If you only have one drive I would suggest partitioning it into two partitions... one for the OS and apps, the other for data.  That way you can reinstall Windows and your apps in situations such as yours.  You could also do two physical drives since they are so inexpensive these days.