"No internet" is a good strategy to avoid malware. You wouldn't even need updates (if you also avoided installing new software). The problem in this case is that Microsoft dropped support for older versions of XP (without the service packs) in Visual Studio, which is the compiler used to build WinUAE and Amiga Forever. That's why new software requires SP2 or SP3. It's not the developers' choice, it is Microsoft imposing it.
XP is now ~ten years old. There have been three major updates (service packs for it) over the years, in order to make it easier for the end user to bring the system up to a definite level of security, reliability and performance (ie. they can be sure that all previously-released updates before that service pack have been integrated). If I had to venture a guess, I would say probably 90% of Windows XP's system files have been modified since RTM probably 5 or 6 times, and some many more times than that. Again, security updates are for the benefit of the end user.
When someone releases a piece of software, they need a definite testing platform for it, partly for their own sanity and partly for the benefit of the end user. Can you imagine what it would be like if Windows was still like Windows 95, where to get effective/ideal dial-up Internet, you had to apply 6 or 7 patches in a particular order in order for it to work?
Anyone familiar with software development would also know that regressions sometimes occur when modifying a piece of software for whatever reason. Imagine having to support all of those regressions as well.
Microsoft saying that a certain service pack level for XP isn't supported any more is as much for their own sanity as it is for third party developers and end users. If they were to support XP at all service pack levels their test routines would expand by an order of magnitude, as would the test routines of all third party developers, because the end user would expect that, and users on forums would be saying "Microsoft support this, so developer x is only being awkward because they feel like it!".
"It should have been perfect to begin with, dammit!"
