Best way to switch an administrator account to a normal account?

When I installed Win XP Pro I made my own account an administrator account.
For security reasons I would like to switch it to a normal account. The way I
see it, I have two options:
- Create a new administrator account and change the type of my original
account.
- Rename my administrator account and create a new normal account with my
current user name.
The first approach seems the most simple to me, since that will prevent me
to copying all my personal settings, files, profiles, etc. to the new account.

For the first option:
Are there any caveats or issues that I should now about?
Will my "downgraded" account really be a normal account or will some of the
admin rights remain?
(Maybe because I am still owner om some files that a normal user is not)