Legally...

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In accordiance with M$ EULA, you are authorized to install any legally owned Microsoft Product onto your home pc, and your laptop. You can infact call microsoft via the 800 # and transfer ownership of any product. In doing that it becomes the sole ownership of the purchaser and you must remove it from all machines in your ownership. I hope this helps..
 
he/she no longer can use the upgrade because upon upgrading you must prove that you owned a "legal" copy of a previous O.S. so the upgrade should either go with the ME or a full version purchased. And win ME is no longer supported..
 
an upgrade of XP requires you to have previously installed or have the OS CD for 98, 98SE or ME
- I have used my upgrade CD for installing over 98, and when I did my second installation (same computer) I installed a fresh installation but it prompted me to put in my 98 CD for proof that I had a previous OS, so I put it in, it verified, and told me to put back the XP CD and it installed
 
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