What you are referencing is the processor serial number that started with the p3. You can disable it in almost all machines, so that really doesnt matter. What XP does is formulate a unique machine fingerprint based on processor, chipset,memory, hard drive, various serial numbers, etc. If you make too many changes (i.e. install on another machine, like if you move the harddrive, or copy an image) the regular versions of windows and office xp will need to re-registered. WIndows will let you reactivate really as many times as you want.
BUT. If they see the same windows serial number start to come up on hundreds of machines, expect a knock at the door.
If you install on another (2nd) box and activate - although illegal, really won't even be a blip on the radar screen at Gates, Inc. Post the install on the web for all to get, different story.
If you flatten the hard drive on the old one, and load it on the new one, perfectly legal. You own 1 legal copy. Next comes your OEM rules however, most state you cannot transfer the license to another hardware unit unless its the OEM providers own unit. Like if you have a Dell, you would only be able to LEGALLY transfer to another DELL. SOme of the OEM CDs actually look for their own hardware and won't install too, so possibly be ready for that.