If you had to reinstall the entire OS, you may have to re-register .NET 2.0 with IIS. From a command prompt in C:\WINDOWS\Microsoft.NET\Framework\v2.0.50727, run:
aspnet_regiis -i
This is assuming you have IIS installed- I don't think IIS is available on the Home version of XP. You should be able to use the development server with VWD without IIS.