>do we need to upgrade to Windows Advance Server 2003
Nope. It would be nice, but you don't NEED to.
You need to figure out what is running on the XP boxes that is locking out the user accounts. I've dealt with this myself, so I have some suggestions on where to look.
1) Check out the Scheduled Tasks on the XP boxes. Jobs in Scheduled Tasks all now can run under any account, including a user account (used to be in the NT times with the AT command, all jobs ran as SYSTEM). If you set up a Scheduled Task to run under your user account, you have to type in the password for the user account. THEN later on, if the password for that user account is changed on your domain controllers, the saved password for the Task is NOT changed. Scheduled Tasks keep the password as typed in; those passwords do not change when a password is changed on a DC. Therefore, when the Task tries to run, it starts up and tries to run as the user account with the wrong password. This will fail authentication, since the password is different. When the Tasks fails a few times (depending on what your Account Lockout is set for), then the user account is locked out.