Yes, XP Home does support dual core cpu's.
You are licensed per physical socket and not by cores per cpu.
Are you planning to use a sound card in this rig? And will you ever upgrade to SLI? Because if you do upgrade to SLI and want to use a sound card in this rig, it's going to be very difficult to get the PCI sound card fit into the PCI slots that are wedged between the two PCI express 16x slots.
Not a major deal, but something you just might want to consider.
Also, if you're not going to USE SLI, then don't bother with the ASUS A8N32-SLI Deluxe as it's a MOBO that has been designed specifically for that use. Don't get me wrong it can be used without SLI, but why spend an extra $75 to $100 dollars?