Can and How do I make my XP Desktop A Web Server

if you have XP Pro this will help you get IIS set up http://www.learnthat.com/courses/computer/windowsxp/iis/
If using XP Home you will have to use a third party, ie Apache,Xitami or something
to get your domain name you need to use a Domain Name registrar, search the web there are lots of them out there,
Just seen your OS is vista same way as xp though

is there someway u can get a custom extension

like .wc3 or .site or .wow

you mean the Top Level Domain ?, if so you do have a choice but not to the extent you mean