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The CPU supports hyperthreading, this is why "two cores" are detected as four. Hyperthreading means that some parts of each of the two CPU "cores" are duplicated while some are not and have to be shared. So in theory "each core" appears as two. Hyperthreading increases performance under some aspects but it is not the same as having two real cores.
Setting SATA to compatibility and not AHCI will probably work. However, it may impact the performance. If I were you I would try switching AHCI off and trying to see if Windows will install. If yes than AHCI is the issue - then I would find the drivers and reinstall Windows with AHCI.
It is possible to switch on AHCI after the Windows installation but it is complicated. Google can help there, or let me know if you get stuck.
XP 32 or 64 flavours come on different installation disc. So whichever disc you have will get installed.
Also beware of 64-bit XP, the driver support is quite limited as its adoption was not that great. Win7 drivers do not work on XP.
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