OS will not boot in Normal Mode

I have another computer where my Windows XP Professional SerVice Pack 2 will no longer boot in Normal Mode.The start-up freezes after the WIndows Logo install screen.  It will boot in Safe Mode, but I have never understood what good that does me. It is supposed to be a diagnostic Mode, but I have never read anywhere how that does me any good to figure out what is wrong with the normal booting sequence. Sure, there is some driver or application that might be causing this problem, but how does Safe mode help me find the culprit?  I have tried using the Last Known Good Installtion, but it doesn't work. I have done a System Restore to a previous day when the system worked, but that doesn't cure the problem, either. Is there a detailed guide to using SAfe Mode to fix problems somewhere on the net?

 

I have far too many updated drivers and apps installed to easily do a complete system restore back to factory ship condition. What is the procedure for reinstalling the OS without over - writing the existing drivers and apps? I would like to see if this low level repair can restore my system before I tackle the larger task of replacing all my drivers, updates, and applications. I think this can be done from the Windows CD, but I dont know if the CD drives work in Safe mode. Thanks for your help ahead of time.