Either version is good...whichever you prefer. Same files are downloaded/installed.
You could also manually do the install via Windows Update.
I see no point in paying for something (CD) that can be downloaded and installed immediately, as opposed to awaiting a CD via mail...but that's the way I look at things.
The advantage of the network install package (as I see it) is that it makes it easy to slipstream a new XP CD with SP3 included...and it precludes network problems of any type interfering with the install (potential nuisance with using the WinUpdate site).
Frankly...if you suspect hard drive problems, the time to check such is now, not later.
No SP3 or Windows update has a beneficial effect on hardware situations.
Hard Drive Installation and Diagnostic Tools - http://www.bleepingcomputer.com/forums/t/28744/hard-drive-installation-and-diagnostic-tools/