internet options>content>auto-complete.

there is a button in there to clear passwords.

If you are obsessive about security then reinstall your system...

With password info pertaining to personal things like purchasing and banking matters, I would definitely wipe the system and do a clean reinstall of Windows. Overkill ?  Personally I don't think so.   But that's what I would do if the pc were mine. 

I'd just rest at ease a little bit more.

Safest thing is to just replace the hard drive, and trash the old one. Hard drives are not very expensive and replacing is not a big problem.

I'd use a tool like Eraser ( http://www.heidi.ie/node/6) to erase the drive and reinstall XP.  If you have the copy that came with the computer, it'd be a quick install.  Then just let the new owner configure it as he wants.