XP works similar to MS office, it looks at what your sys config is and as far as I am aware assigns a "code" of some kind and places that against the product reg, the copy of XP having its own code too kind of like a unique ref. If the two dont tally with the registration info then you have problems. If you change your HHD you should be ok but change a graphics card or MB and you have a problem on your hands, Calls to MS asking for a resolution as you system don't work

Just to put the licensing thing into prospective for none IT people.
One of our clients decided to upgrade from Win98 to Win 2000 as standard and also eplace their existing PC's. (160)
The license thing is a nightmare for IT companies, apart from the fact that the cost can be prohibertive, you then have to decide which type of licence, OEM, Corporate, stand alone etc.
If you then add SQL, Exchange and 2000 server you come into the relms of CAL's (Client Access License) this is where good old MS begin the sit back and count the money bit. For the 160 PC's, SQL, Exchange and 2000 servers and all the CAL's the cost prior to cutting corners was £24'000.
Now pardon me for being blunt but that's a bloody rip of and whilst I appriciate the developers put alot of work into the products its a major bummer for small to med size bussines.
I have not used Linux myself but look forward to that day. its time MS got its sh** together and stopped ripping the punter off.