Yes, versions up to and including Windows for Workgroups 3.11 are currently working, but only under DOSEMU+MSDOS (not FreeDOS).
Sorry, no you can't. Win32s is not supported yet, Win9x is neither.
Yes, this is similar to using it in DOSEMU on the console; the only extra thing to consider here is that the emulated graphics card in xdosemu is a Trident, which is most likely different from your real graphics card. The mouse also needs some special attention.
For faster graphics (256 colors instead of 16 is faster in xdosemu), get the Trident SVGA drivers for Windows. The files are tvgaw31a.zip and/or tvgaw31b.zip. They are available at garbo.uwasa.fi in /windows/drivers (any mirrors?).
Unpack the Trident drivers.
In Windows setup, install the Trident "800x600 256 color for 512K boards" driver.
In Dosemu, start windows.
Yes, up to and including Windows For Workgroups 3.11.
In order to let the mouse properly work you need the following in your win.ini file:
[windows] MouseThreshold1=0 MouseThreshold2=0 MouseSpeed=0
The mouse cursor gets not painted by X, but by windows itself, so it depends on the refresh rate how often it gets updated, though the mouse coordinates movement itself will not get delayed. In fact you have 2 cursors, but the X-cursor is given an `invisible' cursor shape while within the DOS-Box.
Because the coordinates passed to windows are interpreted relatively, we need to calibrate the cursor. This is done automatically whenever you enter the DOS-Box window: The cursor gets forced to 0,0 and then back to its right coordinates. Hence, if you want to re-calibrate the cursor, just move the cursor outside and then inside the DOS-Box again. (97/2/10)