1. Yes,Also Make sure u edit Boot.ini file in case of any Trouble after the Format
2. Yes,U will not have any Problem..
3. Nope,
READYBOOST feature is exclusive to Vista Only
..And Ur flash drive should be Ready Boost Compatible for it to be used in Vista
4. You should Better upgrade to SP2 to not face such problems..For Now try Using
Windows Installer 3.1 Redistributable (v2) to troubleshoot .msi files..Its available for download in Below Link
http://www.microsoft.com/downloads/d...DisplayLang=en