OK, I wouldn't say that was the universal conclusion.
Win7 on a IBM ThinkPad R51 with 512MB of Ram works perfectly fine.
Win8 DP on the Same Machine works extremely well.
I see no problem in it working fine on a VM of higher specs than this machine, but, yet as in your case we have seen this happen.
The-Prophecy says "If you have the virtualization instruction set active (or present) in your CPU, it actually is close to what you actually tell it to run with", I still have to disapprove, running an OS on a machine is always different from running it on a simulated machine environment.
Win8 DP seems to know this in your case has it's AI working well
.
The way a VM will work on XP is certainly very different from the way a VM will work on a Vista/Win7 64Bit . Thus, this could be a Machine-OS-VM-OS glitch, if you understand that.
In your case the Host OS itself is taking up 80 to a 100% of the CPU resources, leaving the Guest OS to utilize only 20 to 0% of the Cores that you dedicated to it.
Very little to work on, on a PC. But as we see, it works extremely well, on a rig with lesser "real" hardware.... leaves me further inclined to the result that , Maybe, XP on a Dual Core isn't the best VM environment.