Will Vista recognise Windows XP file transfer settings and more

I have an OEM Windows XP+SP2 (fails WGA) so will install Busisness Vista
from a Full install DVD key. Even though I have paid for and have a
Full/clean install key can I actully use the upgrade option with that key.

Please understand I have not even seen Vista yet. Are different options
highlighted. If for example I put in the full upgrade key will that be the
only option available. I am deadly afraid of loosing precious configuration
data and settings on the XP I now have. Since I am putting Vista on the SAME
disk/partition I am worried about loosing everything with the full/clean
install DVD. What is the best safety net to have in place backup wise.

Second:
Is there a Files and System Transfer program on the Vista DVD that can be
run FROM XP to put my XP stuff from the C: drive on to say the D: drive
BEFORE I install Vista. With that I could them just format the C: drive and
do a true clean Vista install getting rid of I am sure of much junk. I know
you can do that on two computers one XP and the other Vista. But here we
have a bit of a chicken and egg problem. Vista has removed the XP since it
is on the same disk. Will Vista recognize the old XP Files & Settings
Transfer wizard file. If it did I could first put it on D:drive then
install Vista on C: drive and them pick stuff back from D:


Third;
Will Vista recognise and work with Old Windows XP backup (.bkf) files