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It is possible as long as your system requirements are good to go. I would say go ahead and install XP SP2, and when you get your Media Center, pop the disk and an perform an UPGRADE. This way you wont lose any files and it will install fine. (You can put the disk in while windows is running, and select Upgrade installation and then sit back and answer some simple questions)
Its ok, my new computer has it and its ok, but I don't really that its OOOH SOOO MUUCHH better than XP with SP2.
It has a really cool jukebox function, but other than that I found that the entire Media Player bundle that came with it was way too bloated. I like third party software better anyways but thats just me.
I dont think that the Media Center version includes any security updates that aren't available for service pack 2