but how do you hook them up? a special video card?
you can do it one of two ways.
If you have a dual output video card (most newer cards) you simply hook up a monitor to each output, and you're good to go. In XP, it will work out of the box... you'll just need to mess with a few settings. You can then install Ultramon and tweak to your liking.
Alternately, if you have a video card with one output, you will need a second video card. This is a bit more trouble, but not really. You'll have (probably) an AGP and a PCI video card, each powering a monitor. IIRC, PCI cards try to take control first, so you may have to play with that a bit.
I haven't used a setup with 2 cards yet, so I can't be a ton of help there. Dual output cards are the way to go IMHO for pure simplicity. You could also get a dual output card and a PCI card for triple monitors

which I've considered... but just don't have the desk space for.
As for your other questions, yes, you just drag what you want to the screen you want. You can still minimize and maximze to one screen, or drag wherever you want. Also, with Ultramon, you can add buttons to your top bar that will stretch the application across both screens, or pop it to the other screen with one button press. Very handy.. they put them right near the min,max,close buttons, so they are very easy to get to.
Chad - I won't be much help with a dual vid card setup, but Ultramon does a lot of stuff for you, so it just may help. You may also have to do something in your BIOS to allow PCI video cards??? not sure but it might be worth a look. Make sure windows sees both screens, and check your display settings. Make sure your secondary screen is enabled.