I have run into this problem myself. It seems Microsoft has designed XP so that you cannot simply install it on one machine and move it to another, this, of course, would be a violation of your license using it on different machines so it will give the blue screen of death when that is done.
Easy fix is to simply install it on the machine you want to use it on. I know this doesn't work if you have XP on one of those idiotic multiple CD RESTORE setups, again a Microsoft no-no.
I found this out when my HP blew it's motherboard, and I decided to use the XP that came with it on a new machine I built up to replace it. Of course the hard drive from the HP had XP installed but it refused to work. The work-around, I borrowed a friends XP CD (his was the normal XP CD) then istalled it on my new machine, using the CD code from my blown up HP, all went just fine and I am using it as I type.
Now I realize that this isn't exactly koser with Microsoft, but hey, I bought the machine with XP included, now that the machine is destroyed, do I still not own the license that came with the HP?
I think a case could be made for that anyhow as we all know nobody OWNS Windows XP except Microsoft (windows anything that is) and they ONLY licnese it to we users, that way they can get by screwing us at every turn.