1) yes very good idea, repaing troublesome softwar ecan lead to more issues down the line if you have the relavant files and backups I would always go for formatting and reinstalling.
2) yes you can, go in to a itunes (7.1 or a bove), and find the page that shows how much space you have on it. near the bottom is a tick box reguarding use as hard drive. once ticked you can just see it in the same way you can the C: also does your 60gb have 60gb freespace, or at least more than you need to cover your files..
3)outlook, file menu export to PST save this to ipod or other source then you can just open it on your new install
4) reinstalls are good, but does your computer have anything on it that Windows might not recognise?, you may for example have some hardware that needs a special driver. or you may not have the source files for all the software you had, do you have all your licenses and product keys still?
if you have the cd's that came with the computer they will likley have all the drivers you need in there..
pen an paper to work out how much space you need, export your email (dont make files bigger than 1.8 gbs for PSTS do several if you have more mail than that.
or.. go to www.snapfiles.com look for software called tuneup in the shareware section under system maintenance its free for 30 days that often has a good impact on sys performance, as does ad-aware