What you are talking about is wiping the hard drive. Yes, you can do this. Do you have the original boot up disk from when you purchased the computer?

Once you have gone into each program and copied the material you want to keep (My Photos, My Documents, Shared Documents) etc... and taken all the programs you have purchased and put onto the hard drive back off... (if you have the disks for them, and they don't carry any data, then don't bother with copying them back)

Reinsert the original boot up disk. FORMAT DRIVE > It will give you a warning that all previous data/programs etc will be erased, is that what you want? > Yes. There ya go!