The reason is simple.
Windows Product Activation (WPA)
This is how it works.
WPA ties the 25-digit product key from your installation CD to a �snapshot� of the physical system it�s installed on, based on 10 pieces of hardware which carry unique serial numbers � typically this will include the CPU, video card, hard drive, SCSI adaptors, etc. It also takes a note of the amount of memory.
This �snapshot� produces ANOTHER code, which is combined with the XP product key to create a 50-digit number, which is unique to your system.
It is stored in a file named WPA.DBL in the windows\system32 directory.
O.K. so far, I accept that reasonable methods to thwart piracy are necessary.
BUT � now the problems start. Time for upgrade, maybe a new hard drive and video card. O.K. so far. Now throw in that new CPU your been lusting after. WHOOPS!!
The Activation Wizard kicks in, because with more than 2 of the �key� hardware components changed, XP thinks its been installed in a new PC and deletes the WPA.DBL file and tells you it�s time to contact Mr. Microsoft and get it straightened out. Admittedly things are a little easier if you have a network card installed. Then you�re allowed 5 changes (instead of 2) before XP gets narky. In my case this is unacceptable. I earn my living as a computer repair technician, and any one of my 3 systems may be used a test-bed for errant customer hardware, or simply trying new products. XP then becomes simply unworkable.
And by the way, DON�T EVEN THINK ABOUT setting the WPA.DBL file to �read only� to get around this (stupid me � what was I thinking??). The result is a system crash, a completely dead registry, and you still have to contact Microsoft to re-activate!

Adding new components has no effect � just upgrading hardware that existed at installation time.

Changing an item several times � for example going from a 10Gb hard drive to a 20Gb, and then to a 40Gb � counts a ONE change.

If you don�t have a network card, put one in � even if you won�t use it. They�re dirt-cheap and provide an extra buffer before hassles start.

XP checks the system configuration every 120 days and updates the WPA.DBL file, which then becomes the new �baseline�. If you can, keep track of the dates of XP installation and subsequent hardware upgrades, and bear the 120-day timeframe in mind. You might just save yourself a whole lot of bother if you wait another couple of days to put the new video card in!

Notebooks get special consideration by XP. Presumably because of the changes involved in docking/undocking. XP seems to ignore any changes to IDE/SCSI devices and video cards on notebooks. And yes you CAN lie to XP and tell it your desktop system is a notebook! (System Properties � Hardware � Hardware Profile � Properties. Select �This is a portable computer�, leave the docking state as �unknown�). Haven�t tested this extensively, but on one trial run I changed 6 key components without the wizard kicking in.

In closing, I would like to point out that I own completely LEGAL versions of: