Even though windows vista is out, does microsoft continue to make updates for windows xp?

Answer 1

And they will do so until 2009 which is when mainstream support for Windows XP will end. Extended support will last until 2011 which means you will only get critical security updates.

Answer 2

Yes. They still release updates to 2000, as well.
Of course, this is all relative to the updates being made. If all three versions use the same DLL, they'll all benefit from the update.