I just looked it up, and as of SP2, WinXP Home supports dual core processors and uses both cores.
"Windows XP Professional can support up to two processors regardless of the number of cores on the processor. Microsoft Windows XP Home supports one processor."
http://www.microsoft.com/licensing/h...multicore.mspx
So it seems you'll be fine with Win XP Home on a Pentium D processor, as long as you have SP2.