Windows 7 starter edition is only available in 32 bit format.. I don't think its the processor (nehalem in this case) not supporting it.. It may rather be the board manufacturers who do not give support (drivers basically).. The starter edition was built for OEM's so may be it runs on restricted hardware with custom made drivers.. Further deductions may be that the X86-64 architecture, on which most of the current generation processors are based on, may not be recognized by the installer..
I'm wondering why anyone would not want networking on a Xeon system.
When programs and games get beyond 4 cores and people start to migrate to dual processors you may see more support but by then intel will add multi processing to newer chips and the nehalem will go away.
If you think, it's all about money. Intel has the server chips in a small niche, the 980x croud in a small niche, and then everyone else. Keep the multi(6-?) cores seperate and expensive for the captive market. (dummie like me)
There is some support see below: http://search.microsoft.com/Results.aspx?q=nehalem+and+...