The disc is nothing. The license is what matters, since you're asking about what's legal or not. Microsoft will sell you a pile of WinXP CDs for cheap. It's the licenses they'll make you pay a lot of money for.
OEM Windows licenses are "married" to the computer that they came with, or the first one they're installed on. If you're looking to be legit, then you'll want to buy another Windows license. If you have Terminal Upgrade Disease like I do then buy a retail-boxed Windows (rather than OEM) and you aren't restricted to installing it on only one machine forevar, you can put that license to use with any single computer that you want to, any time you want to. Higher up-front cost, yeah...