Yes, I just did a quick experiment and you can only create DFS mount points on a server machine. So you couldn't go XP throughout and still use my exact system. I should point out, though, that the DFS part is really just a nicety - there isn't a requirement that it be done that way, particularly if you're using Xlobby as your front end. Xlobby will happily handle content on multiple drives/shares, you just need to make sure your cover art is stored either locally or on a server that's up all the time, otherwise you'll wake up everything while you're browsing.
The cases didn't have enough power cables, but molex splitters are cheap (like $1), so I bought a ton of them. I also bought a bunch of 3.5" to 5" mounting kits so I could put drives in the big bays as well as the small ones, those run about a buck a piece also.
I'm honestly not sure if Home would be sufficient for this. From looking at the Microsoft web page I don't see anything that would be a showstopper, especially if you aren't running a domain and don't care about access control. I've done Pro mostly because it's what I'm used to, and I get it cheap because I'm a Microsoft employee. I won't tell you how cheap, it might make you cry.