Tagging photos between Vista and XP

All of our photos are on a "server" running XP, and are usually viewed on an
HTPC running MCE 2005 in the living room. My wife has a laptop with Vista
and has taken on the project of organizing and tagging years of photos with
Photo Gallery. The photos all remain on the XP box.

My question is, where are the tags saved? Are they written into the jpg
itself, or are they maintained in a database somewhere? If we upgrade the
HTPC in the living room to Vista, will it be able to read the tags she
created on the laptop for photos that remain on the XP box?

She is finding that while tagging is fast enough for individual photos, if
she tags a batch of photos opened off of the server it takes a very long time
to process. Is there any way to speed it up? She doesn't want to copy jpgs
to the laptop, tag them, then copy back to the server because it is very easy
to get confused about what has been tagged and what hasn't. Is it a simply
matter of improving network speed by plugging in