OEM licenses of Windows 7 are non-transferrable and tied to the motherboard that the system is activated on. Retail licenses of Windows 7 can be transferred to a different computer: provided that the computer that was previously activated is decommissioned or no longer in service. OEM versions typically cannot be used to directly upgrade from an older Windows operating system like their retail counterparts. In cases of troubleshooting issues with activation or a disaster, you can contact Microsoft to activate by phone. In most cases, they will work with you in this regard. In matters of activation, there is some leeway given in the event of a breakdown or disaster recovery via phone support/activation. Windows Genuine Advantage (WGA) has gone a long way in helping customers get a copy of Windows and activating it in a legitimate and safe way. For support reasons, you can extend the activation period for unlicensed copies of Windows up to 120 days from 30. You can do this by going to Start -> Search -> cmd.exe and running: slmgr -rearm Running this from the Windows Command Prompt (cmd) at the end of the 30 day trial period can be performed a maximum of 3 times in the event of a support or activation problem that is currently in dispute. It is also useful when running test/evaluation/demonstration copies of Windows in a virtual machine environment. Typically, the licensing is available but the system is destined to be formatted over and over for lab purposes. slmgr /dlv will give you a detailed run-through of your activation status, including the maximum number of re-arms available if your system becomes unlicensed. This information is useful if you are on the phone with Microsoft Support personnel for activation. I hope that this helps you understand the difference. Remember: Microsoft still holds the copyright and trademark IP for the software itself, and unless you already own a license for Microsoft Windows, it is not legal to download it from a site like Digital River. However, for backups or recovery purposes, it is wise to maintain (or in many cases obtain) a copy of Windows on backup. One tip for someone like Andrea is to consider running Windows XP Mode or converting a Windows XP Mode system into a VMWare Workstation copy. These licensed copies can be used in a virtual machine environment with almost no limitation. Those who prefer Windows XP or need it for a legacy program like Lotus 1-2-3 will find this method very useful and unobtrusive.