To my knowledge it tricks the update server into thinking you're running the POS software but Embedded is actually a totally different OS. Be kinda hard to do flippy floppy with just a reg hack. The security updates should be nothing more than simple back door flaws being updates. Obviously Microsoft would want to naysay since they want these people to upgrade.
The point of the post rather was in mockery though. I can understand holding onto your dear old OS but if you want to do this then pointless security obviously isn't your priority.
Edit: Read any of those comments? These idiots apparently don't work in any real IT field
Some machines I've worked on still run 95 and OS/2 and were made after XP was made.