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...When the system is activate a hardware hash is created.. this is basicly a MD5 hash of the basic hardware information of the system this is compared to a hash of your product key.. If the Key hash matches a different hardware hash or a known group of pirated keys your escorted to the appropriate page.....
there has certainly been a problem with a huge amount of people. I unfortunately have suffered from a similar experience where I did get locked out of a production server running a legit version of XP server. The solution SHOULD have been a simple call to Microsoft and an answer on how to resolve it. Instead it turned into a 3 day escalation, backtrack, re-escalation... until I finally got ahold of an understanding invidual who bypassed "policy" to assist me.