Dell CD - No Longer Honors Product Keys From OEMs

I recently installed SP3 on my Dell Dimension 2400, and it screwed things up. It won't let me uninstall it, so it would appear my only option at this point is to do a complete reformatting.I have a Dell reinstall XP +SP1 CD. From what I've gathered, this works for ALL Dell PCs, not sure if it came with mine, or my mother's Dimension 2350. Supposedly, it'll check the BIOS to see if it is a Dell computer, and then it will work. Regardless of model. (No model or BIOS version is listed on the CD its self.)However, I have some questions I'd like to have answered before I proceed.1. I've seen some instructions on how to make your own XP reinstall CD. Would doing that, or using the Dell reinstall CD be preferable?
2. If the Dell CD, there is..... something on the CD. I tried wiping it with a damp cloth, but it wouldn't come off. I've heard coating a CD in toothpaste is a good way to clean it. Is it really such a good idea?3. I've heard that as of 2006, Microsoft no longer honors product keys from OEMs. Does this mean I'm screwed if it asks me for a product key? (The key it came with is still on the sticker on the PC.)