By default there is a limitation of 10 on the number of concurrent TCP/IP connections that a Windows XP machine can have. I was wondering if this will affect the performance if we are setting this windows xp machine as a Relay.
Our tests show that there is a performance difference in the relay between workstation and server OSes, but not a hugely significant difference. However, generally speaking, it is best to use server computers for relays because they tend to be powered-on most of the time and the OS of servers is more geared to relay functionality than workstations. Also, if you have lots of agents reporting to a relay, it tends to be more important to use a server-class OS.
I think you are confusing the SMB connection limit and the maximum number of TCP connections. Windows XP Professional has a limit of 10 SMB connections, but the default number of TCP connections is 16777214.