It is best for the Home User to wait until they see it available at windows update to get it. This way you will get a significantly smaller download and installer based on what patches you already have and which ones you still need.
I suggest that if you choose to enable automatic updates, you set them to prompt only, not to install automatically.

Cherokee Chief provided this advice when SP1 came out and I am including it here since it is still valid for installing SP2

(Norton Antivirus issues with SP2 upgrade are listed farther down)

Ok here is what you need to do.

1. Clean out your temp files in the temp folder.
2. Clean out your temporary internet files and cookies.
3. Defrag the hard drive.
4. Turn off your anti virus and firewall before downloading the service pack and installing it.
5. During the install you will be asked if you want to archive the files, do so. The archived file scan be deleted later if the service pack works. Having the archived files, will allow you to uninstall the service pack if you have any problems.
6. After the pc reboots, reboot a couple more times. This insures that when you start up every thing will start up with in a good time period.
7. After rebooting the extra times, turn your anti virus and firewall back on.
These steps will help insure that your download and install do not get corrupted. That is what causes allot of the bad installs of the service pack.

After about a week of running the service pack and you find that you do not need the back up files, here is the info on how to remove the archived files.

SP1 – SP2: Removing Archived/Backup Files:
If you selected "yes" and did a backup it should be listed in Add/Remove.

If not, check here: Start/Run/Regedit
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\Current Version \Uninstall
If you no longer wish to uninstall SP1 – SP2, you can remove those extra files, to do so: Set your folder options to show hidden files then go to: C:\Windows\$NtServicePackUninstall$ and delete it.
After uninstalling the folder go to Add or Remove, choose uninstall and it will fail and then the listing will be removed.
I have been running the service pack since it came out and before it was released when it was a beta package. I have not had any problems with it at all. As long as you follow the instructions I gave you should not have any problems with it.

Although written for XPSP1, this is still the best advice known of for install of SP2.
Note that due to the threat of modern network aware worms you should turn on the XP firewall before disabling your firewall.

Also, those with spybot resident shield and teatimer should shut them off too.

Pete Covell; Moderator for G4TechTV adds.
Here is what we have gathered so far as the best advice for a safe install.

Back up your data to be safe. You should have been doing this all along, but this gives a good excuse to catch up on it.
Do a disk cleanup, clean temp Internet files, empty recycle bin and defrag. Good standard maintenance and definitely worth doing now so that things are clean when you do your Service Pack 2 install.
If you have an XP CD, do a system file check. This way you have all damaged or missing dlls and system files replaced before you do the Service Pack 2 install so that it is working with a solid install. Put your XP install cd in your cdrom drive and go to start/ run and type
sfc /scannow
hit enter. It will start windows file protection and compare all files to the original install or update patches (The $NTuninstall files in windows). If it says failed, hit retry, it just means something is using it and you have to hit retry to pause the process. May take two or three clicks of retry.
Restart computer
Turn off your antivirus; make sure script blocking is disabled. Enable the windows firewall (right click on your connection in network places and choose protect with ICF) and disable your current firewall. If you have spybot run and choose advanced interface (under mode) and under tools go to resident and disable resident shield and tea timer.
Run the install if you downloaded it or windows update if you are doing it that way. It will take some time so be patient. Do not panic if things seem to stop. Get a sandwich or something. Just check back to see if you have to click something else.
When it finishes and asks to restart, choose no: I will restart later and then finish. Re enable your antivirus (but leave off script blocking) and firewall.
Restart PC. It will take a bit longer than normal on reboot, but not extremely long. It should finish with a prompt to enable automatic updates and verify your firewall and antivirus. If Norton antivirus, it may not properly interface so you may have to choose the do not monitor my antivirus it checks for updates itself.
Re enable spybot resident shield. It will warn of a new IE toolbar (which warns of sites trying to run active x or install things behind your back) and a lock of the blank.htm web page file to prevent its being replaced by coolwebsearch. Re enable script blocking in your antivirus.
One final step I like to do is clear the prefetch file. This will make sure windows does not waste time while booting looking for files which were replaced. I prefer using X-setup to do this, but you can just locate windows/ prefetch and delete the contents.

Six notes.

All the add/ remove programs entries for old hot fixes disappear and are replaced with a single Service Pack2 uninstaller.
Many of the $NTuninstall entries likewise disappear. Only those installed independently of the service pack remain.
Double-check your security settings in IE and services settings. This resets everything to default settings, which may not be as restrictive as you or I like. It reset my Internet zone security to medium for example and would turn on some "services" which gamers had disabled. Double-check the performance tab in control panel / system / advanced. In other words, double check all your settings since most will be set to SP2 defaults. These are more restrictive than SP1 defaults, but still not as restrictive as I like.
Norton Antivirus. If you have a Norton product you will have to run Live Update Manually twice after you install SP2. This will install an update to NAV itself and a WMI patch to allow it to integrate with the Windows Security Console. You can now go back and if you previously selected "I have an antivirus and will monitor it myself." you can now uncheck it and NAV will integrate with the windows security console. NAV may ask if you want to allow other software to be informed of its status, approve this.
It has been reported that third party "hacked" drivers may develop or cause problems, so if you have any it is strongly advised that you uninstall them and install the latest approved drivers from the manufacturer prior to doing the upgrade. Failure to do so may make it very difficult to install either driver.
If you have a browser other than IE set as default browser, after the upgrade make sure to go to tools/ internet options/ programs (in IE) and verify that IE should check to see that it is the default browser is not checked.

Found one out with SP2 And Disabling Services. To receive updates after upgrading to XP SP2
To get updates through the new download site.

You MUST HAVE THE FOLLOWING ENABLED!!!

1. Auto Update (you can set it to download and notify you)

2. Background Intelligence Transfer Service

3. Event Logs

Went through and found if you go through blackvipers list of safe settings You must leave these running to get updates from M$ download site.

Norton Antivirus. If you have a Norton product you will have to run Live Update Manually twice after you install SP2. This will install an update to NAV itself and a WMI patch to allow it to integrate with the Windows Security Console. You can now go back and if you previously selected "I have an antivirus and will monitor it myself." you can now uncheck it and NAV will integrate with the windows security console. NAV may ask if you want to allow other software to be informed of its status, approve this.

To uninstall Norton Antivirus:

Completely uninstall Symantec AntiVirus

Problem: The solution to many problems with Symantec AntiVirus is to completely uninstall Symantec AntiVirus, then re-install. You can use these instructions to completely uninstall Symantec AntiVirus.

Solution: In order to completely uninstall Symantec AntiVirus and all related components you need to follow these instructions.
Note: This procedure will remove all Symantec products, not just Symantec AntiVirus. If you are unsure of any of these steps, please call the CIT HelpDesk at (607) 255-8990 for assistance.

1. Click on Start | Settings | Control Panel

2. In the control panel double-click on Add / Remove Programs

3. Look through the list of installed programs for any item that says either "Norton" or "Symantec" or "LiveUpdate". (for example "Symantec AntiVirus Corporate Edition" or "Norton AntiVirus 2000")

4. For each "Norton", "Symantec", or "LiveUpdate" item, select the item and click Add / Remove. Follow the instructions, and click Yes or Yes to all when prompted.
When you are done there should be no items in the list that say "Norton", "Symantec", or "LiveUpdate".

5. Click OK to close the Add / Remove Programs window.

6. Reboot your computer if it hasn't already automatically rebooted.

7. Delete the c:\Program Files\Symantec AntiVirus (or c:\Program Files\Norton) folder.

8. Delete the c:\Program Files\Symantec folder.

9. Delete the c:\Program Files\Common Files\Symantec Shared folder.

If uninstalling Symantec AntiVirus using Add / Remove Programs does not work, you can use the directions on the Symantec website to manually remove all elements of Symantec Antivirus from your computer

Download details Windows XP Service Pack 2 for IT Professionals and Developers:
Note that this is the link to the full 266MB download designed for IT professionals, Computer and Network Technicians who have many different PCs of unknown status to upgrade. If you use windows update you will get a custom install tailored to your circumstances, which will probably be in the 40MB range. Home users are advised to wait and use the windows update version to avoid potential problems, which a computer technician would know how to deal with, but they may not. .

Windows XP SP2 Slideshow:

Thanks to dale654, for discovering this link in the Microsoft Knowledge Base.

884130 Programs that may behave differently in Windows XP Service Pack 2

Thanks to Nerelda, for discovering these links in the Microsoft Knowledge Base

How To Troubleshoot Program Compatibility Issues In Win XP

How To Use Offer Remote Assistance

How To Perform a Clean Boot In Windows XP

How To Troubleshoot Hardware and Software Driver Issues In WinXP

General Windows Troubleshooting In Windows XP