Seeing that this is how the virus he got is spread, I wouldn't really reccomend that. Also, WindowsXP has it's own built-in CD burner. It's crude, but it works for backing up data to CDs.
DO NOT BACK UP APPLICATIONS. Many viruses spread themselves to every .exe and other file they can touch. If you back up programs, you may very well back up the virus itself and welcome it onto your new computer. NOT GOOD.
And remember after you reformat, if you don't use a firewall of any kind, do use one (even the built-in WinXP one which /should/ be turned on by default) at least until you can download the Windows Update patches. There's a ton of viruses that spread over port 135 that I was talking about earlier.
Well you wouldn't even have time to turn on the XP firewall if you are using broadband so I would recommend unplugging the computer from the internet in that case until you turn it on.