First and foremost...let's get technical here...
You are allowed one copy of Windows OS, per Registration Key (Activation Key).
however; once you install it, that does NOT mean, you can never install it again. You just aren't allowed to have the same copy of Windows running on two PCs.
Microsoft will ask you when you call them, "Is the other PC still in use"...I recommend telling the truth here, however; if it is "not in use"...ie: you formatted the HD, and promise MS, that you are no longer using the PC, they will provide an activation for the new Windows XP.
Each piece of hardware in the PC, goes into the creation of the "registration number"...that is then "activated" by Windows. It does not recognize indivdual keys, it recognizes the key configurations...created based upon components of the PC.
Example: sometimes, when you change a major component, like video card....it detects a change in the code, and can sometimes cause Windows to fail, and you may need another activation key.
That's about all I can say, however; no big problem. Read this article carefully, and with some common sense and rational thinking, you'll be fine. ^_^
Michael