Yes, Buy it will require a high end video card or multiple video cards.
no
http://support.microsoft.com/default.aspx?scid=kb;en-us;307873 This article indicates that WinXP supports up to 10 monitors. Many video cards will support 2 monitors. If you install two such cards, then you may connect 4 monitors. Add video cards as long as you have empty PCI slots in the PC.
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If you have a video card which supports dual display then you can connect 2 monitors to your computer. If not then you can either buy one that supports it or you can also buy something called a KVM Switch which allows you to connect multiple monitors and switch between them.
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