Number_Of_processors environment varaible on dual core machine

It should in fact, be 2.  I'm running dual core, and it does say 2.

This is good explaination
http://windowshpc.net/forums/thread/681.aspx

I can not change mine, it keeps changing itself back to 1. Any idea why?

is your  machine  Hyper Threaded ?
Can your mainboard manual give you any info?
Did you install Vista first?
How to dual boot Vista and XP (with Vista installed first) -- the step-by-step guide
http://apcmag.com/5485/dualbooting_vista_and_xp
Does a dual-core processor count as one or two for licensing purposes?
http://blogs.msdn.com/oldnewthing/archive/2006/10/02/780255.aspx

restricting the number of threads used on a dual-core Intel machine
To check whether you are using multiple threads you can run

mm <- matrix(rnorm(1e6), ncol = 1000)
for (i in 1:10) print(system.time(crossprod(mm)))
I do the timing multiple times because sometimes it will only use 1
thread for the first few cases then switch to multiple threads.  If
the elapsed time (third element of the timing result) is less than the
user time (first element) you are using multiple threads.  For example>> please continue>>
http://www.arcknowledge.com/gmane.comp.lang.r.mac/2006-03/msg00007.html

The motherboard is the Asus Striker Extreme - Nvidia 680i chipset. I did reinstall Vista, and now the number_of_processors is showing 4, and I verified muliple cores are now being used. Still cant explain how it changed and why I could not manually change it back.

Sounds good john, I take it you have solved the problem now?
Probably the install proceedures, Vista should install first. As I mentioned in my previous comment.
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thank you again
Merete