Here's an analogy that might help:

Your house (or apartment) is protected by one or more locks (I should hope).  Each of those locks requires a specific key in order to get inside.  You have the keys, and you get to decide who else is allowed to have them (say a neighbor you trust that you give a copy of the keys, say in case you accidentally lock yourself out - or no one has heard from you in several days and someone might be worried if anything has happened to you).  However, by giving someone else a copy of the keys, you have vested a great deal of power in them.  One could use the key to enter your house while you are away and steal your stuff.  Obviously you would not give someone a copy of the keys to your house unless you trusted them not to break in and steal your stuff.  i.e., you would not trust someone with your keys unless you felt that someone was *trustworthy.

*Content protection works in basically the same way.  In order to play protected content, a player (hardware or software) needs to have the ability to decrypt it.  Once it has access to the content, it can do what it wants with it.  So the owners of the protected content are not going to want just anyone to be able to decrypt the content, just like you would not want just anyone to have the keys to your house.  They will only allow a player that they have deemed to be trustworthy to have access to the content.  (Trustworthy in this case meaning that the player has been analyzed and tested to make sure that it behaves as it is supposed to and complies with all instructions on what it is and isn't allowed to do with any given piece of content.  Basically, that the player will not violate the trust that the owners of the content have placed in it by allowing it to play the content).

You would not be able to play a Blu-Ray disc under Windows XP at all, because XP is not a trusted system in this regard and thus does not have the keys to be able to decrypt the content on the disc.  XP doesn't have the capabilities to ensure that the content is protected, so they will not be allowing to have a key.  32 bit versions of Vista will not be allowed to play Blu-Ray discs because the system will not be able to guarantee protection of the content.  The 32 bit version needs to allow for unsigned drivers because otherwise it would break existing applications.  However unsigned drivers can break the protection.  As Vista 32 bit is not trustworthy in this regard, it will not be trusted to handle protected HD content.  (Back to the house analogy, if you have a friend who is loyal but forgetful and would be prone to accidentally leaving your door unlocked or losing the key, you would not want to trust him with the key to your house either).

One could create a software player that would work under XP, if they could get a key for it.  But the entity that owns the protection scheme probably isn't going to want to trust them with it.  Under Vista, a software "player" doesn't need the key because the component that does the decryption is part of Vista itself (thus making Vista the actual player in this regard).  They do not need to trust any other software for Blu-Ray discs to play under Vista, so therefore they won't.  (Generally a device should only be trusted if it needs to be, otherwise it becomes just another point at which the protection should fail.  Back to the house, there is no reason why I should ever need access to your house, therefore there is no reason to provide me with a copy).  Rather than support XP and Linux, and given the fact that it would be impossible to secure those systems anyway, they'll simply tell people to get Vista if they want to watch HD on their computer.

In summary, sticking with Windows XP will not let you watch Blu-Ray or HD-DVD movies free of DRM restrictions.

Not that the stuff with Vista is at all a good thing.  The kernel is even more bloated, both with the media stuff and all the stuff to ensure protection of content, and it degrades performance by checking up on the drivers 30 times every second to make sure that they haven't been in any way compromised.  If the ability to watch HD on my computer is going to degrade everything else, then I'll pass.  (And I can see the possibility of a sort of denial-of-service attack against Vista, getting something to try to play a protected MPEG file from somewhere to cause one's monitor to blink out because Vista won't let it receive the content.  We could all do without that).