I've reinstalled twice in the last month and was able to reactivate via the web without a hitch. These 2 were in addition to the original activation
The key here is in the number of times you activated. IIRC you are able to activate 3 times per 90 days via the online activation. After that you have to pick up the phone and spend 5 minutes on the phone with Microsoft.
Dunno if they're able to detect 2 separate installs and block one from updates but as far as I'm concerned, I'd rather buy 2 licenses for peace of mind.
You will have 30 days from the activation on the second machine before being asked to activate the first machine. Again, after three activations per 3 months, they will require a call. They will probably grow suspicious if the same key is activated every month. They will eventually realize the attempted piracy and disallow you to activate one or both machines.
Dunno if they're able to detect 2 separate installs and block one from updates
They are only able to count how many times a specific activation code was activated. Not on how many machines it was activated on. Of course, they aren't stupid. "Activation code blah-blah-blah has been activated once every 30 or so days. I wonder what's up here. Hmmm..."
M$ sure likes to make using computers more difficult than it needs to be
Other companies have done this before. None were on the scale of Microsoft, so Microsoft gets all the negativity thrust upon it for trying to protect their work. I agree, Windows XP is costly and think they should lower the price. However, I abide by the EULA so activating my OS is not a problem for me. Nor is it "more difficult". What is it, three clicks and you are done?
\Dan