I have to say I love the performance of my WP on terminal services. I will not dignify IHackum2's comment. You really have to try it out yourself. I am an IT manager and use technology of all kinds. Win VNC, Citrix and RDP. Hands down, there is no comparison to RDP. Winvnc may work on a 100mbit network but any where else it is horrible. When I go to my back yard and my wireless is at 2mbit, winvnc is pathetic. RDP is a little slower than it was at 6mbit but not much. You have to read about the technology and make the decision for yourself. http://www.microsoft.com/windows2000/downloads/recommended/TSAC/default.asp
I am not a big microsoft fan but I must say this is the best thing they ever made. That is if they really designed it and did not steal it from citrix or something. I must say citrix requires rdp to run. Anyway, there are so many variables that I encourage you to read the link above then download the msi package if you please.
To enable in XP go to system-properties-remote and check remote desktop
To enable in win2k server, go to add programs then add windows components. Make sure you install terminal service in administrator mode. Application mode requires licensing and will turn off in 90 days if not purchased. Sorry for the lame walk through but I think the hyperlink above does a much better job than I can.
Follow the instructions on client install from above (hyperlink). When setting up make sure you use client connection tools and create a new connection there. You should connect at your highest resolution (800X600 for you WP) and check full screen. This will make sure that it runs in full screen mode and you only see the server desktop, no lines or hint of your resident os running.
I have a wide range of computing hardware in my house, some fast, and some slow the WP. I don't care either way because they all boot to my terminal server. I administer 1 computer (the server) and all the clients get to run whatever is installed there. I don't care about configuration, transfering files or anything else. There really isn't much network traffic...a few k for the keyboard and mouse and about 100k for the graphics back. RDP uses a much more advanced caching schema so that not a lot of data is being sent from the server. Let me tell you, at work I have skeptics all day until I connect to Korea from Texas to administer the server on a 56k dial up. Try that winVNC...thats right it is nearly impossible. Don't think about PC anywhere. Maybe Xterm.
I use my one of my WP downstairs next to the television. Tvguide website is running at all times. The screen saver runs which happens to be family pictures. Everyone awes at the digital picture frame. Then they really trip when they see the screen activated and TVguide is there. Then I play MP3s from my server jukebox upstars with thousands of songs that output to my stereo downstairs. Yep it is convenient. The other WP is in pieces for hacking and testing new mods (would like serial connection for my GPS). The last WP is mounted in my car. I have mapping software installed along with much much mp3s. Since I have a wireless network, I can transfer files from my server upstairs to my car. Thanks to all the walls, it is a whoping 2mbit. My next mission is to find a serial to USB adapter so I can mount my GPS to the WP (unless I can make a serial connection). I have a remote RF mouse remote that facilitates navigation through the apps (hot keys for winamp and stuff) without a keyboard (which is stowed in the glove compartment).
Anyway, that is off the topic. The topic is misleading but who would read "make your wp a thin client?" It was designed as a thin client by makers of thin clients boundless. You cannot compare perfomance of win xp installed versus terminal service. hands down terminal service is far faster unless you have a 1mbit network. The wp doesn't have the processing power for XP though it may work...read the specs. The geode is pentium class put comparible to a pentium 133. mhz isn't the only thing that makes a processor fast, it is the architecture, staging, registers and cache. To say the least, geode architecture sucks except for its power consumption. I say make your own conclusions that fits your needs. Thats what is important and not what any of us thinks. Bahh humbug to the pessimists. The fun of owning this WP is finding the many ways to tweak, hack, mod, and overclock or just find damn cool things to do with them.
Enjoy, Enjoy, Enjoy
This is supposed to be fun :)