Hey Slithe =]
I will try and answer some of your questions. I'm sure there will be many other (more knowledgeable) people to assist you with the other questions (and probably correct me!)
1 - Your set-up seems completely fine. Your specs. meet the recommended specs.
2 - Office XP should run as normal
4 - We use Vista and XP machines at work, and they seem to be able to communicate correctly
8 - If you upgrade, your system files will be stored in a file renamed to 'Windows.old' and you can roll-back your operating system to XP
Sorry it's not much, but I hope it helps to some extent =]