I can tell you that after testing with a machine with a fresh install of XP (no SP1 or SP2) FP works fine, the only must have is macromedia which is free and that is pretty much it.
your problem (I think) is with "advance display options"...2 ways to fix it:
1.Go to setting 1\misc1 and you find that option, untick the box and then you'll see is going to full screen.
2.Go to FP.ini and search for "advance display option" and change to: =False
Hope it works.