You shouldn't need nlite.
XP has a built in tool for slipstreaming service packs.
There was a guide I used on the MS site years ago when SP1 and then SP2 was released.
Also, I was like you, always re-formatting every couple of months and installing just to clear out the crap and speed Windows up again.
But I haven't reinstalled Windows for over a year now. Until recently used to use Norton Ghost to restore an working install of XP with all the essential apps.
Now I use Acronis True Image, lets me make incremental backups in a secure partition. I can restore from the original backup or a more recent back with newer drivers, apps etc.