A. It may help. It'll certainly perform faster initially because it's a new start (I assume you mean 'format the computer' as opposed to just uninstalling stuff one by one.)
B. If you format the computer, you lose everything. Windows itself, programs, documents, games, music, the lot. Make sure you have the windows cd before doing anything though, to reinstall.
C. back up all your personal files you want to keep (documents etc.), but not onto floppy. First, they probably will span many disks, and secondly, floppy disks are a terrible format and get corrupted very very easily. They aren't a backup medium.
Finally, if you can, change to windows 2000, or just get a new computer.