Nikon Raw (.NEF) Format Issues

[Hickeroar]

First off, I'm using a D40...

I'd really like to start using the raw format for all the photography I do. The problem is that after installing the NEF codec on my computer, not all programs respond properly. I can view the images in full resolution (3008x2000) in the windows browser. I generally use the batch features of XnView to resize an entire directory (not overwriting the originals) for upload to my gallery, but for some reason this program is only seeing a very limited resolution compared to what the photo actually is when using NEF.

With my fine JPG files, I use a resize script that resizes them to 35% of the original size which gives me roughly 1050x700 resolution for upload. With the NEF files this particular program is only seeing them at a little less than HALF the original resolution and is resizing them to WAY smaller than 1050x700.

First of all: Is this a normal problem to be having?

Second: If only some programs can do this properly, what is some good, free software than would have the ability to batch resize an entire directory of NEFs to 35% and save them as 100% quality JPG files? Can the Nikon provided software do this properly? Assuming I want to do some editing of the source images, barring spending loads of money on photoshop, what can you suggest? I have Paint Shop Pro 8 and X, but i don't think either of them support NEF. I haven't checked yet though.

Thanks for any help you all can give!