Yes. They use the same drivers, and virtually all software that runs on one will run on the other.
Nope, "sp2" means "service pack 2". Service packs fix bugs and (rarely) add features, but do not upgrade you to a different operating system.
Yes.
The simple answer is both are based on similar code base, but one is made for business (W2k), and the other for main stream (XP). Windows XP SP2 AND WINDOWS 2000 SP4 are the standard minimum versions...
You need a windows XP operating system CD to install Windows XP on your computer.
How to Manage Open Windows - Windows XP
How to Turn Windows XP into Windows 7
Reinstalling Windows XP - #11 - How to Reinstall Windows XP
Reinstalling Windows XP - #8 - Get Updates For Windows XP