|Correct nomenclature would help a lot.|
I suspect you're talking about "thin clients" and not actual "dumb terminals" since dumb terminals are used in conjunction with a mainframe computer. Which a Windows XP based computer is not.
If you are indeed talking about thin clients then I would suggest you won't be able to do it with Windows XP unless you can find some 3'd party software out there to provide a "Terminal Server" type service on the XP box that the thin clients can connect to. Something like Citrix might do the trick, but Citrix isn't free. There may be free software options available out there. I don't know myself, you'll have to go look and see what you can find.
Typically, you'd use a Server version of Windows on your server so you could deploy "Terminal Services" on it and have thin clients connect to that.
Alternatively, if you're fluent in Linux or UNIX, you could look into using one of those OS's for your server. While I don't know for sure if either offers a "Terminal Server" type service, knowing what I do about both platforms I feel quite confident there is.
It matters not how straight the gate,
How charged with punishments the scroll,
I am the master of my fate;
I am the captain of my soul.