About installing Service Pack 2

A game I am trying to play requires service pack 2. I have the download rdy to go, but what happens to all my stuff that I have now? Its says I need to back up files, do I lose everything on my computer??

Three words....Backup, Backup, Backup! This is a safety measure for you. It's not a requirement.

I recommend you running a program called Macrium Reflect Free Edition. It will create a system image of your hard drive the way it is NOW and makes it super easy if you need to restore it.

A tutorial on how to use can be found here:
Imaging with free Macrium - Windows 7 Forums

If you choose not too backup your system at the VERY least create yourself a system restore point, which it will do anyway. But just to be sure create it yourself.
http://www.vistax64.com/tutorials/76332-system-restore-point-create.html

Take Care,

That is a warning only in case something goes wrong but always a wise thing to do in any case. What you should do though is disable your anti-virus before doing the service pack installation, things will go much more smoothly that way.