Also I take particular exception to:
"Why the game doesn't fully support Dual core if it does support Hyper threading will probably be a driver issue of some sorts."
You seem to have fundamentally misunderstood some crucial things here.
The reason this setting exists in the first place is that there are a number of beneficial optimisations that can be made specifically for running multithreaded code on HTT-enabled CPUs, which simply do not apply to single OR multicore CPUs without HTT. This does NOT mean that Ryzom somehow "does not support dual core", it just means that the HyperThreading optimisations are not relevant here.
And for the record, driver issues are a complete red herring on this subject

On the subject of why Ryzom does not appear to "use" multiple cores, this is a common complaint with games (3D ones mainly). Writing good, highly multithreaded code is a hard problem (once you get over a very basic level of complexity), and especially hard when writing 3D games. Ryzom does "use" both cores, but you will most likely find that it will tend to use 90% from one, and 10% from another (or some other similar metric). There is another reason for this too. It is considerably more efficent to have one CPU core at 100% and the other at (or close to) 0% than it is to have both at 50%. When a CPU is not actively processing, it can be put into HALT state, which means that temporarily its resource consumption is greatly reduced (idle processors not in HALT state consume a reasonable amount of resources). Therefore the OS will attempt to schedule in such a way as to take advantage of this. Also note that what you see as "CPU usage" is not especially accurate (especially at low %ages). And that a CPU at 99% utilised is actually not necesarily a bad thing - it just means that for 99% of the measurements taken over the measured period the CPU was doing something.
Also remember that the Ryzom process itself is only a part of what the CPU needs to hande for the game to run - there are lots of background processes that also have to be run - so the Ryzom process itself is only part of the story.
I tried to avoid the Great Wall Of Text phenomenon here, but have not entirely succeeded. Nonetheless, there are some deliberate oversimplifications above - going through and pointing them out will add little to anything other than the posters ego unless you feel that they are actually material to the argument itself.