Windows licensing can be convoluted. The OEM XP from the Dell cannot legitimately be used on another computer in any case. But I would think if you don't like the Vista installation, you should be able to restore the computer to its former condition - it would be as if nothing had changed. In fact if an image was taken of the computer's original XP installation, then re-installed, (or if the Dell restore disk provides a pre-activated volume licensed installation) there would be no license key or reactivation issues at all. I guess the "temporary" Vista installation could be seen much like the original OS had become corrupted and had to be re-loaded.
What could present difficulties would be trying to use the Vista upgrade subsequently. Upgrades inherit the license of the OS they upgrade. If that Vista upgrade has been activated on that system, you would have to convince Microsoft there was a valid reason to activate it again in the future on another system, and that it wasn't being used to upgrade more than one system. That was the purpose of activation after all, to prevent people from cheating and installing either full OS or upgrade on multiple computers.
Curiously, it seems XP does need SP2 to be installed in order to do an upgrade Vista installation. Refer to the conditions here:http://support.microsoft.com/kb/932616
also note the combinations of Vista version that can upgrade from various eligible base OSs.
However, the meaning of "upgrade" is for Vista to take the place of the existing OS with all installed programs, data and settings preserved. The alternative is a Custom install, which does a clean install of Vista, installed programs are not preserved so must be re-installed, and data and settings must be backed up prior to Vista installation and restored after. That's how the Vista install must be done for Win2000, there is no upgrade path, just the custom or "clean" install, which seems to be what you want anyway. It reads to me as if that would probably also hold true for XP without service pack.
Vista requires 15GB of free space on a drive for installation (to accommodate all the installation temp files), so a pre-installation of XP should go onto a partition that will leave at least this much free space - eg at least 20GB. Only have a single partition on the drive. Once Vista is installed, it will see the full 500GB drive, and you can use drive management to expand the existing partition out into unallocated space.
I prefer not to have the system partition occupy an entire large drive. Keeping it smaller makes drive maintenance tasks like defragmentation and backup imaging more manageable.
Edited by Platypus, 15 March 2008 - 07:04 AM.