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Darren, I think that with the way activation is currently set up, you would need 2 licenses.

To Rob G and AndyVX, So far you are the 2 naysayers on this topic. I've heard of Windows upgrade horror stories as well, which is why I posted this in the first place. Do you have any specific experience with an XP (or 2000) upgrade?

My wife just bought a new laptop with ME installed. It comes with a coupon for a free upgrade to XP, which will come when it passes Dell's compatibility tests. I'm a little fearful of installing a bunch of software (mostly mainstream stuff like Zone Alarm, Black Ice Defender, Palm Desktop...