Can I use dual monitors in an XP Home guest
No. The virtual machine only supports one monitor (although it can be virtually any size). If your system supports a "single desktop" mode (where both monitors appear to be one desktop to Windows) then you can get the same effect via windowshade mode and the single, large desktop.
I could not run the same guest in each instance of VM.
That's right. You could clone the VM, but then it's two VMs.
I'd like to open Explorer and drag it to my second monitor.
Not a chance - that's effectively dragging a program between computers, and it's quite hard to do that.
One solution might be to run a second VM that only runs a desktop-expanding program like MaxiVista and use that to get a second monitor (I use it to extend my desktop onto my laptop at home for that all-important third monitor).
Unfortunately VMware itself doesn't work too well on multiple monitors - what I'd really like is a windowshade mode that covered all of the available desktop, even if that meant having to have a rectangular desktop (viz, 2400x1200 rather than my usual 1200x1000 + 1000x1200 with one in portrait mode)
HTH
Moz