Originally Posted by BigLar
However, if one doesn't use these instructions (and other later improvements), they might as well not be there. I'm presuming Microsoft and the other guys compile their code (C? C++?) and thus are dependent on the compiler to generate the proper instructions. And if they do, does the code notice that the processor has these neat instructions and use them, or do they just go for the fat part of the bell curve and get the stuff to market as quickly as possible?
Yes, the compiler creates multiple codepaths that check with the CPU to see which instructions it supports. If it supports SSE* instructions, the program should take the optimised codepath. One of AMD's allegations in their antitrust lawsuit against Intel is that Intel compilers are creating executables that will not use the optimised codepath on AMD machines, even if the CPU reports that it supports the instructions needed.
That said, I wouldn't worry about which instruction sets your CPU supports, as Intel and AMD tend to cross license all that stuff anyway. The sweet spot in price/performance right now appears to be AMD's 64 bit chips. The 64 bit ones are nice because they run existing 32 bit apps natively, and their extra registers mean they tend to run 32 bit apps even faster than the 32 bit chips. Dual cores are nice, but are still too expensive.
I can understand why you're confused, because most of the replies to your technical questions have been misleading or flat out wrong.