Yes I was wondering about this as product keys (as printed on the XP genuine CD’s) are only used to generate machine ID’s (using your own hardware) which are then used to activate windows. There are many instances that I’ve come across where the supplied genuine product key has generated an invalid machine ID which has resulted in a call to MS support. This only happened the day before yesterday which the Microsoft engineer could not resolve and resulted in a complete re-install over the existing version which then generated the correct machine ID and hence the activation code supplied by MS worked. This is a known problem with the algorithm used to generate the machine ID and hence the unique activation code from the MS servers which are issued one after the other and combine to provide your computer with a unique digitally signed ID that can never be duplicated, hmmm........
As a result of this ongoing problem I always use the same XP CD to install XP on a new machine and then, using the genuine CD number, change the product ID by selecting “activate by phone” and then activate it over the net. This means that you can script the entire installation with the same product ID for all machines. The trap is that if you allow the 30 day period to expire, any attempt to (correctly) change the CD product key sometimes results in an incorrect Machine ID being generated which you can then not activate. This has happened to me on more then two occasions since service pack one but not after two (so far).
There are/were known problems with the ms servers giving out ID’s that were duplicates but this has more to do with record locking (SQL server errors) than actual errors, so to speak. As far as I am aware the problem was solved by only having one central cluster of servers issuing activation codes sequentially which combined with your machine ID (which was generated by your product ID in conjunction with a small algorithm run against your hardware) and a small algorithm to generate the signed ID which as you know can be invalidated by various alterations to your hardware various parts carry various “weights” in this scenario.
This was supposed to isolate CD product keys, machine ID’s (obtained locally by your copy of XP) from activation codes which are all obtained by computation and combined by ms servers unique issue of it’s next number complete with check digits which is recorded only on their servers and then transmitted back to your machine using signed ID’s which you version of XP installed on your machine checks for validity.
This is not an infallible process when millions of transactions are involved but it has been addressed in service pack two as all is ignored correct or not.
Well that’s one way of doing it!