Q: Can Windows 2000 take advantage of dual-core technology.

Yes and No.

This is a very common misconception.  Windows 2000 *can* take advantage of both hyperthreaded *and* dual-core processors.  To make a long story short, the OS is unaware of the underlying processor technology.  Windows 2000 will treat a single core, hyperthreadable processor as 2 processors.  Likewise, Windows 2000 will treat a dual-core processor as 2 processors.  There's nothing special needed from an OS perspective to take advantage of the processors.

HOWEVER...  Since Windows 2000 is "unaware" of the processor technology, the problem that comes into play is the licensing.  Since many of our products are licensed based upon the number of processors, it may be limited in what it can take advantage of.  For example, since Windows 2000 Server only supports four processors, you would have to upgrade to Windows 2000 Advanced Server to take advantage of a 4-way, dual core server since it will be "seen" as 8 processors.

Windows 2003 is considered "architecture aware" when it comes to dual-core processors.  From a licensing standpoint, you will still only need Windows 2003 Standard Edition which has support for up to 4 processors. Even though you will have 4 dual-core processors (which will show up as 8 in the Task Manager), you'll be OK. 

When it comes to licensing, Microsoft licenses based upon the number of "sockets" not the number of processors.  This means, that if you have a 4-processor (single core each), you can use Windows 2003, Standard Edition.  This also is true for a 4-processor (dual-core) system, even though *technically you have 8 processor cores).

Clear as mud?