You're correct about the W indicating for workstation use.
X=Extreme/Performance, E=Enterprise, L=Low Power, W=Workstation. Letter designation as part of server & workstation processor numbers are to help with identification of usage segments. The best approach is to review your server application and then determine if you need raw performance, high transaction rates, etc. Then you can choose a processor that best meets your requirements. The letters are there to help classify segment areas.