Aren't computers the funniest things? We loaded up a new Xeon-MP multiprocessor computer with Windows 2000 Server. The Xeon MP processor has a special ability to emulate a second processor on each physical processor, giving up to 30-40% more performance in multi-threaded application performance. HOWEVER, because Windows 2000 Server kernel code works on up to 4 processors maximum, these virtual processors are not recognized in our new 4-way server. We would have to purchase Windows 2000 Advanced Server to make use of the additional capabilities afforded by our hardware. It doesn't seem quite fair, though, considering that when the second set of 4 processors come online - they'll only be 30% of the performers that the actual processors are.
What's interesting is that it's real hard to take sides on this. Microsoft can't very well just give away the Advanced Server kernel to anyone just because they have this virtual processor capability. On the other hand - if I licensed SQL Server by the processor, they wouldn't make me pay for an 8 processor license...so why is it not the same with the OS. As for Intel, they gladly informed me that Linux doesn't have any restriction on the amount of processors that the OS uses out of the box.
It's a very interesting topic. It's called hyperthreading, and Intel has some whitepapers about it (and Windows vs. Hyperthreading) right here.