Downgrading to XP is possible, in principle, but you need to find all XP-compatible drivers for whatever Dell put into the machine. And for that, you probably need help from Dell to tell you where to find them. So I'd start calling them. And probably, they just say "sorry, no", so then you're on your own. Start with downloading Belarc advisor (free) to see all hardware and then visit the original makers site for XP drivers. With some luck, you'll get the machine operational fully or nearly fully (such as: no wireless or no sound, but everything else working).
Also consider license issues. The old XP CD might accept the key on the old machine, not on the new one.

Vista isn't so bad if it's installed on a new machine by the maker. It will surely work satisfactory.

I don't know if WP12 is Vista compatible. Corel didn't know either when they wrote*&p_li= makes me think there are some issues with it.