If you do happen to have a pirated version of Windows XP, then the worst that can happen is that the OS be de-activated. Something like user accounts will stop loading correctly, i forgotten exactly.
Anyways, this is hardly likely...as...I have heard from some of...my...friends .
What is more likely is that when you try and update a pirated version of Windows XP through Windows Update, then you'll be denied permission from upgrading elements. , especially SP2. I understand there to be one common Windows XP Professional CD key that is commonly used on the OS black market , just as Microsoft have found. What microsoft have done is listed all commonly pirated CD keys and made sure that they are all thoroughly checked when a pirated machine connects to the update server.
they will lock your system on the key that they know are bootleg, however there are some keys out there, that aren't registered as bootleg, so they don't know it