I agree with sgorneau on this one. After all, its just an opinion, as is everything on this forum. In fact, his opinion makes a whole lot of sense. Or is that what this forum has come to? His opinion is different, let's shout him down.
I frequently find myself in the position the OP is: helping out friends, as well as strangers, who are not computer savvy. I just want to provide them with the best possible computer hardware and software available, for free or minimal cost, specific to their needs. In the first paragrapsh, the OP pretty much indicates that no matter what, he basically is their go-to guy.
This is the exact situation for installing Ubuntu. On older hardware, and with users that are not "married" to Windows. Non-techies. Computer Users. They just want to do the basics: surf the web, email, maybe chatting, social networking, basic word processing, worksheets, drawing, and other basic stuff. If they eventually want to learn and progress more, Ubuntu is an excellent platform, as practically everything is free. Well, voluntary donations are highly appreciated.
Near as I can remember, here are the options that have been suggested:
1.) Just clean up the computer/s. Delete as much personal information as you can, along with all the other garbage. Delete the old User profiles. Create new User profiles. Continue using the 10 year old OS.
2.) Wipe out the computer's hard drive with something like Dban or Eraser. Then try to scrounge up a copy of XP on disk and re-install, assuming they have the product key. Don't know whether they have the product keys for any Microsoft Office products.
3.) Download Ubuntu (Kubuntu, if you like the Windows look) and install that, choosing to wipe out everything on the hard drive. Get all the free software you'll ever want from the Ubuntu repositories. Pay voluntarily - donate to Canonical if you're happy with the products.
So picture a computer guy, selling you a used computer:
Option 1 - "I have this used computer, which we cleaned, ... relatively, ... and deleted all the old User profiles and created new ones, and it has a 10-year old operating system in Windows XP, along with a bunch of other software that are already installed on the machine. Not to mention its the most targeted platform by malicious hackers, etc... but don't worry, I've put in all the free anti-virus, anti-malware programs there are, and even a firewall."
"By the way, support for Windows XP is ending on April 8, 2014. If you're running this version after support ends, you won't get security updates for Windows. Learn to live with a 10-year old OS and Win-rot."
Option 2 - "I have this used computer, which I totally wiped clean of all the data on the hard drive. And somehow, I managed to get a copy of Windows XP on the internet and installed that too. Just download all the free software you can from the web, since I don't have all the disks for Microsoft Office, etc... Pssst, if you want more "free software", look for Windows XP Black .... but you didn't hear it from me. It's legal, as long as you don't get caught."
Option 3 - "I have this used computer, which I totally wiped clean and installed the latest version of Ubuntu LTS (or Kubuntu, for windows-centric people), which will be supported for the next 4 to 5 years. Also included are a full blown Office suite (Libre Office or Open Office), and a whole slew of of Internet, graphics, multimedia software that you might find useful. And, there's much, much more totally free software on the Ubuntu repositories, should you want more."
"Sure, it's got a miniscule market share, which could be a plus, because it's hardly targeted by malware and virus writers. It's used all over the world, in Europe and Asia. And it runs rings around Windows XP on old hardware. Installs in even less time."
My pick would obviously be option 3. About the only disadvantage I can think of is driver non-support from certain printer manufacturers. I usually stick with HP, who seem to support Linux better. Epson and Canon too.
Now the OP could decide that he/she really wants to re-install Windows XP, regardless of where he/she gets a copy of it. And that's fine. But, at least, he/she has been given other opinions, which is really what he/she was asking for : - "what do I need to do to make that old PC ready for a new owner?"
By the way, I speak from experience, as I'm sure a lot of you do. I collect used computers from offices that want to get rid of their computers. I clean the hard drives, and rebuild computers. Depending on the hardware, I install either Windows XP or Windows 7 dual booted with Ubuntu / Kubuntu or Lubuntu, with the Linux as the primary boot. Then I donate it to people who need it. Mostly kids who can't afford to buy their own in these hard economic times.
Most couldn't care less about firing up Windows on the dual boot. They get used to the Linux variant within an hour of using it. Some have actually emailed me back a year later to tell me that they're studying computer programming, based on all the free programming tools that can be found in the Ubuntu repositories. I guess it's like drive space - given the space, it will be used.
And no, I don't end up as tech support for them. Somehow, they seem to learn to help themselves. The irony of ironies ... it's the Windows Users from the offices that donate the computers to me that call me a lot about how to do things on Excel, Word, Access, etc .... Come to think of it, yeah, most people that do call me repeatedly about the same or similar issue are Windows users. I'm sure your mileage may vary.
To the OP, if you decide to re-install Windows XP, send me a PM. I might be able to find an OEM disk. Depending on location, just pay for postage.