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all digital cameras I've tried so far do not require any software to interface with XP, just plug them in and you camera is mapped as a removable drive.
When XP first came out, there were problems with many games, mostly due to ATi and nvidia's XP driver performance when compared against 98(se). Now, both nvidia and ATi have excellent driver sets available for XP and performance is just as good as in 98.
Yeah, the default theme for XP ain't that great. I personally set it to the default win2k kinda look and turn off all the extra options like fading menus and such. XP is the most stable o/s (besides NT and of course 2k) that microsoft has released. it's also a helluva lot more compatible with external devices than any of their other o/s's were.
regarding WMP, maybe i'll give movie maker 2 a try to see how it does, in playing around with divx, I never got a good encode at full 320x240 res without having syncing issues with the audio and video (though at all other resolutions divx plays no problem)
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