I know this is an old question, but has gone unanswered. This may not help you, as you probably have found the answers, but this may help someone else.
Talking from experience with this product…
1. Yes, it works with Win XP. And it should with any other NT based Win 32 OS.
2. Yes, you have full access to the packet. However, if you change the packet at all, you will have to recalculate and replace the checksum header fields.
3. No, an intercepted packet must be passed on before the next packet can be intercepted.