Processor Upgrade

The 1800 supports only the original HT Xeon processors, so multi-core technology is not an option.  There is a VERY small chance that an early Core 2 Duo (Dual-Core L2400, T2500, or T7400) could work, as the 1800's chipset (Intel E7520) does support them ... that alone, however, is not usually enough.

As for it running circles around your T300, that can depend on many things, including software configurations.  You said it has a 2.66 QC, but which model of processor is it?  What OS is on both?  What services do they host?  Disks?  RAID arrays?  Controllers?  The 1800's processor running at 3.6 can outrun a 2.66 in pure processor clock speed for certain applications.

How can I find out if a Core 2 Duo will work or not?

As for the running circles around my T300.. 1800 is running windows server 2008 r2, no raid, 2 sata hard drives.

The T300 is running windows 7, no raid and 1 sata hard drive that is being controlled through a raid controller card.

I was thinking about switching the 2 around and using the 1800 for my desktop pc and the T300 for my webserver.

You said "with that in mind", so if it works, use it, but there is a difference is how the systems prioritize hardware, how the hardware processes requests, and interaction between the OS and hardware that the driver provides.  Drivers aren't so much an issue when Windows has them all built-in, but when you start having to use manufacturer drivers instead of OEM drivers, or drivers intended for alternate OS's, then you start to mess with that balance.  How the NIC's are setup, how the disks are handled by the controller, how the disks are formatted by the OS, etc. are not unimportant considerations either.  Because of intended OS behavior, there are differences in how the OS expects hardware to field its requests, and you may find (either to the plain eye or only from benchmarks) that the two are not always on the same page.

It is easy to see the apparent power in a server and wonder how awesome it must be performing day-to-day stuff, but they just aren't optimized to do the same things in the same ways.

Well all the computer gurus around here stated that they would make very fast desktops. Reason I was asking is, my desktop is a Dell XPS 400 single core and I was thinking about buying a new pc, but I had these servers so figured I would just use one of them beings they said they would be fast and save me from buyinh a new one. I don't need anything fancy for gaming or movies, all I do is program and create websites, burn music and surf the net. Thats really it.

With that in mind why wouldnt they make a good fast desktop? Windows 7 seems to run fine on the T300 and Windows 2008 runs great on the 1800. I was actually just going to swap the 2 and use the 1800 as my desktop.

Any input is appreciated still..

Try it and see .. or Google til you find something or give up looking :)  While technically the chipset supports it, it usually needs BIOS support too, which Dell has not added.  So, unless there is a specific reason - or an in compatible feature that Dell needed to block, it may work.  I would not spend a lot of money or buy from someone who will allow a return if it doesn't work.  The only way to test unsupported support is to try.

Neither will make a particularly good "desktop" ... is there a special reason for wanting/needing to do this?

Part of possibly why the T300 is "underperforming" could be it is running an unsupported client OS that cannot properly use the hardware.  It can depend on lots of things still ... you could even have a similar problem if we were talking about two identical systems with identical hardware.