1) If this was an OEM copy then technically NO as it is only supposed to go with the original equipment (there are a lot of ins and outs to this that can bite you in a production environment).

2) Yes, does require activation with Microsoft. But if you mean does XP make it's presence known, other than the activation it better not as Microsoft is then breaking their promise on monitoring. However I would look up the method to remove MSG Messenger ASAP and do not run any unnessary services.

"Don't roll your eyes at me. I will tape them in place." (Teacher on Boston Public)