SMP dual core high CPU usage on VM guests

If I boot the system into the SMP Kernel, VM Guests CPU usages average 20-70 percent. If on the other hand I boot into a non-SMP Kernel, usage will average 4-22 percent.

My question is, in order to get the full effect of a dual core system what should I do/tweek?

System Config:

Host OS: Redhat Enterprise Linux 4 (2.6.9-34 Kernel)

AMD Athlon(tm) 64 X2 Dual Core Processor 3800+

2 GIG RAM

2 Windows XP clients(128 ram) Only used for a small program.

6 Windows 98 systems (128 meg) Only used for a dos program.

I can use the current setup and just squeek by, however I would really like to have the host use both cores so that I can assign half of the clients to one cpu and half to the other.