<<If I do a clean install will I be going back to square one then?>>
Yes....maybe even further
. Depends on whether you have a Microsoft XP install CD...a restore partition...whatever. Most systems that I remember as having Media Center installed...don't have CDs for such, they rely on restore/recovery partitions. In truth, such do not even allow for a "clean install", they just take the system back to the items installed on it when purchased. Considering that some of that is totally unnecessary...I would not consider that a "clean install" of any sort, just a reversion.
<<If I do not have to start over with a clean install, do you recommend any free software I can use to create an image in case I have problems with a clean install?>>
Disk image? If you mean clone the partition to another hard drive/partition...sure, I can recommend:
EASEUS Partition Master is a magic partition manager software for Windows 2000-XP-Vista-2003- - http://www.partition-tool.com/