Worked in my case, though I did install an update fix I found on line during the process of trying to figure it out. Wish I could remember the name now for you. In your case, the upgrade to IE8 might be all you need to do. It finally downloaded and install around 170 updates to the OS after several hours. You need a good internet connection. SP3 is pretty large by itself.
If your computer Mobo/CPU is 64-bit it makes no sense using a 32-bit OS. Other than that XP SP3 is a fine OS. I prefer W7 though. A 64-bit OS and USB3 is a great combo for digital photography and video.