You can store the two files that contain the Windows Product Activation (WPA) data on a floppy disk, and copy them to the system after reinstalling Windows so that no activation is required from Microsoft's site or by telephone.
The two files are called Wpa.dbl and Wpa.bak. And they're located in the C:\Windows\system32 folder (if Windows is installed to its default Windows folder and not to a folder with a different name of the user's choosing).
The two files contain a description of the system's hardware and the activation code that Microsoft generated from its site or provided by telephone, both of which are encrypted. At each system start-up, Windows XP decrypts (unencrypts) the description and checks to make sure that the hardware matches the recorded description. The details that are recorded include the serial numbers of the hard disk drive(s), and the MAC address that every Ethernet network card has. A user therefore cannot copy the two activation files from a system that has the same hardware, because although the make and models of the hardware are the same, the identification numbers are different.