Article 4 of the Windows XP EULA covers this;
you should be able to find it in \system32\eula.txt:
<<
4. TRANSFER-Internal. You may move the Product to a different
Workstation Computer. After the transfer, you must
completely remove the Product from the former Workstation
Computer. Transfer to Third Party. The initial user of the
Product may make a one-time transfer of the Product to
another end user. The transfer has to include all
component parts, media, printed materials, this EULA, and
if applicable, the Certificate of Authenticity. The
transfer may not be an indirect transfer, such as a
consignment. Prior to the transfer, the end user receiving
the transferred Product must agree to all the EULA terms.
No Rental. You may not rent, lease, lend or provide
commercial hosting services to third parties with the
Product.
>>
You probably have to call the activation service and let them know you are
tranferring the liscense to another person/machine, or to find out if there is
anything you or the other person needs to do when activating on another
machine and to get the registration transferred.