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Originally Posted by trentsteel
To clarify its position, a Microsoft spokesperson told BetaNews, "Press reports indicating Windows XP Service Pack 2 will install on pirated or illegal copies of Windows XP are not entirely true. Prior to installing, SP2 will check the OS' product ID (PID) against a list of known pirated PIDs. If a PID is found to be invalid, SP2 will not install."
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I think SP1 worked the same way re: known pirated codes.