The press release sent out by Microsoft announcing the agreement reads:
The implementation of Windows XP Professional on the XO laptop is not, in any way, limited or crippled, as the company explains. It's feature-complete, has a battery life of 20 hours, boots in 50 seconds (which is 4 times faster than the original XO Linux implementation), and required a whole load of custom drivers in order for it to work on the XO, which has a 433Mhz AMD Geode processor, 256MB of RAM, and 1GB of Flash storage. Microsoft needed to write drivers for the various pieces of hardware in the XO laptop, and also a new BIOS that would allow Windows XP to be booted off a 2GB Flash card; the 1GB of internal storage of the XO was not enough to house Windows XP Professional and Office 2003.
Windows XP supports all the special features of the XO laptop, including the power-saving monochrome e-book display, networking, speakers, microphone, and its webcam. In the below .wmv video Bohdan Raciborski, of Microsoft's Unlimited Potential, demonstrates all the features of the XO laptop running Windows XP Professional and Office 2003.
It's not a popular thing to say in the intertubes, but I'm impressed with this implementation of Windows on the XO laptop. For such a limited device, its performce outstanding - just another shred of proof that contrary to popular belief, Windows NT is a very good system. Who knows, maybe Windows is the best platform to run Sugar.