Wikipedia actually has a pretty good explanation of the difference between 32 bit and 64 bit operation. You can read it here.
I had been looking at some wiki pages but not that particular one. Thanks for the link.
That article has the following paragraph.
"Currently, most commercial software is built as 32-bit code, not 64-bit code, so it can't take advantage of the larger 64-bit address space or wider 64-bit registers and data paths on 64-bit processors, or, on x86 processors, the additional registers in 64-bit mode. However, users of free or open source operating systems have been able to use exclusive 64-bit computing environments for years. Not all such applications require a large address space or manipulate 64-bit data items, so they wouldn't benefit from the larger address space or wider registers and data paths; the main benefit to 64-bit versions of applications that wouldn't benefit from them would be that x86 versions would be able to use more registers."
So...to answer my question...this paragraph suggest that XP32 would then use 32 bits of the 64 bit register and the other registers would not be used. XP32 wouldn't use the full 64bit address space either, but again it probably wouldn't want to in most cases anyways.
This article gave me the impression that Vista 64 using all 64 bits of the register would also use 64 bits of the address space, but that while running limited or 32 bit data using the full address space would be a "waste". This article mentions z/os which I had never heard of which uses 32bit address space along side 64bit registers.
Have I read the article correctly?