What's the best method for rooting HTC Desire?
Do I need both S-OFF and root? How are these two things related?
I essentially want to root because I am often short on space so I want to be able to store apps and associated data on the SD memory card instead of the internal phone memory. For this I will need root, right?
Will I be able to use the original HTC software/ROM after rooting?

rootingtag to your question. Please hover your mouse over it for more information, and follow the hints there. We have a central index to find the rooting questions for special devices, and yours is already listed there (How to root a HTC Desire running official Android 2.3?) The answers there should provide you some help ;) Good luck! – Izzy Jan 24 at 16:45