I did this just the other day, but with XP pro. First go into BIOS during boot up and change the boot order, it will be floppy then hard, change it so your CD ROM is second instead of hard, make hard third.
Then its just a case of inserting the CD, and following the instruction when you continue the boot up. It will take care of format etc. I did a full format, that was the general reccomendation when i was asking for help.
This assumes you have already made back ups of all your files, have all the driver CD's to hand etc.