Well certain Xeon's do work with windows 7. Also as a side note the requirements to run a server pretty easily arent that high to be honest.
I've got my eq on a single core 1.8ghz laptop with 3 gigs of ram on a 5400rpm hDD and I can run about 50 zones at a time.
And it was tested to run around 35 people at once without a problem.
But back to the original topic, If you could post your motherboard and xeon processor your using, we can double check the compatibility.
I have run a server on windows and linux. Personally I like windows because its a little more user friendly.
And there isn't any restrictions to use windows compared to linux besides the obvious that linux is a little less resource intensive.
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