Yes, you can run UFT3.0 with Windows XP. If you get an error message, you might want to check out one of the optoins listed at http://rug1.tripod.com/XP_UFT.htmhttp://rug1.tripod.com/XP_UFT.htm
Yes, you can transfer your UFT data to another program. The best option is to purchase TMG (The Master Genealogist) see http://www.whollygenes.comhttp://www.whollygenes.com , as it will drectly take UFT data (no gedcom needed) via its GenBridge capability.
The choice is yours ... stick with UFT or go to a more modern and supported program.