You stated that you're using Windows XP Pro, but that is not enough information for us to give you a usable solution. Are you using IIS, Apache or another web server?

As for the domain "children", they're counted in levels usually. For example:
com is the first level domain, mydomain is the second level domain and www is the third level (sub)domain.

There is no reason why you can't have fourth (fifth, ..., twentieth, nth level subdomains) at all. For example, the following is a perfectly valid domain:
http://lets.get.up.to.domain.level.ten.for.talkphp.com/