Microsoft will provide updates. But they will not give you support for any question you might have about the operation. That is why it is an OEM product. It is made for system builders like Dell, HP, Acer and so on. As they provide their own support. So if you have any issues with the software, you cant go to Microsoft for an answer. You will have to get it via 3rd party.
Add into that the software will be tied to that mother board. If you upgrade in the future you will not be able to use that serial again. It stays with that mother board and dies with that mother board. The limitation of buying OEM software.
Read more about it here
To answer the questions from your first post, you cant use that copy of Win7. As it is tied to the Pavillion and dies with the Pavillion mother board. It is an OEM. So you will have to factor in an OS with your purchase cost.