I have a question.
If I set up a fresh system with a dual boot XP/Vista OS how does it work adding in software/games to the system?
What I mean is; if I install a game in the XP OS do I have to install it again to make it work under Vista, or vice versa?
Thanks for the help

Here you go:
Dual Boot Vista and XP (With Vista installed first)
Dual Boot Vista and XP (With XP installed first)
Those were the first hits on Google, when searching for "Dual boot Vista and XP".
EDIT:
And with games it depends on registry settings, savegame folders and DRM types (if any).
Some games places saves and stuff under system folders, so you cannot access them without moving them around with different OSs.

The general rule is, you will have to install the game in both OSes in order to play it in both OSes and they usually will not be able to share things like configurations and save games. There are always exceptions to the rule, but it is usually best and safest to just install the game twice.

As far as setting up the actual dual boot goes, installing XP first is strongly recommended; Vista's partition manager is a lot more user-friendly and it will automatically detect XP and set up the boot loader for you.
As the others havse mentioned, games won't work all that well between OSes because you can't share saves (except for older games that save to Program Files, but that requires you to have UAC disabled which is strongly discouraged). If you aren't worried about saves crossing over, a lot of games should run quite happily without being properly installed.
Games don't make much use of the registry, so keys being missing won't be an issue for older titles, but games that use SecuROM or the like look to the registry for authorisation; you will need to do a manual reinstall (don't worry, this won't affect the registry DRM keys of the other OS) or use a crack.
As far as Steam goes, you may be a bit stuck; everything goes in Program Files (due to Valve using permissions editing to get around UAC's safeguards rather than actually fixing Steam's non-compliant behaviour) and I'm pretty sure you can't change this behaviour; you may not be able to launch Steam from that directory without it complaining.

Anyone who cannot help but mess up an OS without UAC deserves it. UAC is the fucking devil, and should be shot in the face. Which is what I've done on any of the computers I've had to use with it.

Too much words for the simplest question :-P
Short and easy answer: One OS --> One Game. Even if the game could run in the other OS too (granted its partition is visible), surely there would problems and issues with it. So don't do it, and install the game on the OS you want to play in. This doesn't apply to DOS games anyway.

I know Fallout works fine, as does Diablo 2, Freelancer, Battlezone, and probably some other games I'm forgetting. As I mentioned, it all depends on the game.

No, it isn't a game-related issue, is a Windows related issue. The Windows Registry stores settings for games, so the fact that the game "works" is only a matter of luck than functionality. And functionality should be preferred on luck. Windows is neither Linux nor Win 3.1 with their local "ini" files et all....

Of course it's actually Windows related with the registry settings and such, but often these settings are non-vital to the older windows games. There is some minor problems (like Diablo 2 autorun not being able to find the disc, but the game that has been copy pasted from some place finding the disc and playing without problem), but these settings depend on how the games utilizes the settings in Windows, and the configuration for the game at all.
All the games I mentioned are at least 6 years old and the only problem I've encountered with the games mentioned, was with Freelancer, which had a minor problem with the fonts, which I still played through the singleplayer camping on 8 times, made a save for every ship and explored every system in, despite that (needless to say, I didn't have much to do at that particular time).
I have never tested crap like this with newer games, because I cannot be arsed with the registry settings they depend on so dearly.

Heh, considering these are old games with potential issues on their own, I prefer cutting them down instead of creating more of them with such things like a "cross-OS-run-patchwork".....

That's not true for steam, actually. :D