Your question about whether the operating system can be updated has a simple answer -- yes. Although I am confused about your server set up.
Are you running an actual server with windows 2000 server or do you have a workstation operating as a server running windows 2000 profession? You see there is no Windows XP server, Windows XP is a workstation (client) operating system. The upgrade from the Windows 2000 server is Windows 2003/2008 server.
One thing you need to be careful of in upgrading this computer from Windows 2000 professional or server is the hardware you are currently using. If your hardware is so old that Windows 2000 was the original operating system, save yourself the trouble and purchase a new computer. The overall cost of such a purchase is worth it compared to the trouble of using old equipment with a new OS. However a new computer would require a reinstall of your applications as well.
Applications that run under Windows 2000 almost without exception run under Windows XP. Of course your application requirements will list whether it can support Windows XP. If you have product support with the application they should be able to assist you. I can not imagine where a Win2000 application would not run flawlessly in Windows XP. However if you use the application outside of their listed specs then you support contract will be useless. Of course you can run Windows 2000 in emulation with VMWare but that is beyond the scope of this discussion.
You may be afraid of an experience like moving from WinXP to Vista. That is a completely different issue. The codebase with Vista is distinctly different from XP. The upgrade from Windows XP from Windows 2000 was nowwhere near the trouble the current Vista upgrade process has been.
If I were you I would keep your old computer and use the old PM on that until you switch. Install the new PM and AC on a new computer and pitch the old computer once you make the change.
Geoff
