Which processor pair did you purchase/try? PE2900 supports up to 5100. PE2900 II supports  up to 5300. PE2900 III supports up to 5400. From the system configuration of your Service Tag, yours looks to be a 2900 II.
Hello, I own a Dell Power Edge 2900. I love it, its a great server. I am looking to upgrade the processors. Currently I have two 2.0 GHz core 2 duos installed. I am wondering if there is a approved processor list or something where I can search for a faster and more powerful core 2 quad to install in it. I attempted to purchase a matched pair, and I am unable to post with them installed. I switched the new ones out for the old ones.I am running Bios version 2.7.0, its the latest available for download. My Service tag is [ADMIN NOTE: Service Tag removed per privacy policy] I can get more specific if more information is needed. Thanks for your time!  Aaron Hammond Owner - Lan Hut Communications. 
Processor question for a PE 2900