Is Norton necessary w/XP and SP2?

I think that you will find pretty universal agreement here that both Norton and Mcafee are resource hogs.My suggestion would be delete Norton and get these two things from Grisoft:
For your free antivirus software
free.grisoft.com/freeweb.php/...lng/us/tpl/v5
For free anti spyware:
free.grisoft.com/avg-anti...lng/us/tpl/v5
I have been using both for quite some time and am very satisfied with both.

In answer to your first question,No you are not covered by Sp2 satisfactorily and really must have an anti-virus,at least, running.

Correction:
For spyware the site is:

free.grisoft/com/doc/avg-anti...lng/us/tpl/v5

I think the answer is that Norton seems to spread it's files and processes accross a broad spectrum of you pc's resources(registry/program files/etc)and just using the add/remove process does not get rid of it all,sometimes leading to from minor to severe consequences on your pc's performance.
Using the Norton removal tool seems to delete everything that even smells like Norton,wherever it it hiding.
After all,who better to remove all traces of an application,then the people who deseigned it.

Good luck

Khaptain:The Grisoft products that I mentioned do not incorporate a firewall.
If you are behind a router,which is basically a hardware firewall,then perhaps the windows firewall MIGHT be adaquate.The windows firewall only protect you from incoming attacks and does not monitor any attempts by the applications on your pc to initiate outbound communications.
Many on this forum recommend Zone Alarm.It has a free version which I use and is very satisfactory.
You can download it at:
www.zonelabs.com