Regarding questions about what hardware changes would trigger a reactivation, Nieman
told me that the reality is, as expected, less dramatic than what many people fear. "Basically, if you do a substantial upgrade, you'll be asked to reactivate," he said. "Standard upgrades—adding a new hard drive or network card, for example—won't require you to reactivate." Also, making many changes to your system will eventually trigger a need to
reactivate. Nieman compared the hardware configuration check to the one Windows uses to determine whether you need a new driver when you add hardware to your system and then
reboot. For security reasons, Microsoft won't say what exactly triggers the reactivation.

from win2k mag...

Additionally, you can choose to activate your OS by calling Microsoft and reading the 50-digit number to a carbon-based life form (rather than sending it to a silicon-based server). The recipient will then read a 42-digit number to you, which you key in to complete your activation. Unfortunately, that's a one-time-only 42-digit value; should you need to reinstall the OS on that system, you must call Microsoft to get another code.

As I explained last month, a Microsoft server then stores your 50-digit code and your product key in a database. If someone tries to activate a different machine using your product key, the database will see that someone's tried to install the same copy of the OS on two different machines and will refuse to authorize the activation. Additionally, every time you boot that system, the system recomputes the 50-digit value and, if it's too different from the one used to activate the system in the first place, the OS will demand that you once more connect to the Internet to reactivate your copy. Small hardware changes won't require reactivation. If, however, you lend your neighbor your Windows XP CD-ROM and product key and he installs it on his system and tries to activate it, the Microsoft server will see a radically different set of hardware trying to activate an already activated copy of Windows XP, and will tell your neighbor's system not to activate itself.

But how much hardware difference is "too much"? Nieman wouldn't say because (1) Microsoft hasn't finished Windows XP yet, so anything he'd say might change, and (2) he didn't want to make life easier for pirates. A reasonable answer, but I argued that a determined bunch of people with a closet full of hardware and a day or two to play around could (and would) soon figure that out, so why not just release the information anyway? He demurred, but told me to stay tuned, because Microsoft might publish that information come shipping time anyway.

Such a big deal ! They seem to have reinvented a big heavy wheel that will crush
normal and legal users as always... Reversers will always find a solution for this,
and the result could be a big rush on protection-removed future copies of windows xp ;-)

A beginning of public discussion almost began on this subject, but concerning office xp. We should not expose some serious info here before their final release, just to make their protector's life harder.

Agreed. Will pursue project "underground" and publish here only as needed.