From the Windows XP EULA:

1.1 Installation and use. You may install, use, access,
display and run one copy of the Software on a single
computer, such as a workstation, terminal or other
device (“Workstation Computer”). The Software may not
be used by more than two (2) processors at any one
time on any single Workstation Computer. [Emphasis Added]

The Issue: If you have one legal installation of windows on a partition, and also have Linux, MacOS, or some other OS on another partition you can dualboot just fine. If you install VMware workstation on your other OS and configure it with raw disk access to read and boot from your one legal installation of windows on your one computer WPA detects the different hardware configurations and forces you to re activate. If you use different hardware profiles for virtual native boots.. you are still borked.

The White Elephant: Doesn’t this seem like a perfect opportunity for the use of Hardware profiles? Since you only have one installation with different hardware setups this should not break the EULA, or at least the part I quoted above. Since it is impossible to talk to a real life Microsoft technician or lawyer we are at the mercy of their poorly thought out WPA malware.

The Source: If you want to see firsthand the uncanny silence of a MS representative, and simultaneously the inane chatter of MS volunteers (I admit some of them were helpful/sympathetic) check out the posts on the MS forums dealing with this topic.