It does indeed work on XP... I think one of the patches screws it up.
I played the first one... There were some serious problems with it, though. Firstly, the villager/food thing was really annoying. From what I understand, the game used a special algorithm and said that 1 villager needs x food per day... Then, if you didn't have that much, they'd want food. This sounds good on paper, but once you get villages of a couple hundred people, you'd have a ton of food, but id simply wouldn't be enough...
Also, the food vs. children thing annoyed me, too. If you gave your villagers the food they wanted, they'd want children, who would then want more food, and if you gave them more food, they'd want children. Repeat ad neaseum. It may be more realistic that you can never please your village, but its a game, I'm not playing it to be realistic.
I haven't played the second one, although I've heard that its underwhelming at best. Still, I hope they fixed the micromanagment stuff.