OEM copies of Windows are permanently locked to the motherboard after installation, a limitation imposed by Microsoft. Attempting to install it on another system will report the license as invalid when the hardware is checked during activation. Windows XP and Vista also 'phone home' to Microsoft's servers every two weeks or so, as well as every time a 'major' hardware change is detected, to determine if it is still valid on that machine. Thus, even if Microsoft verifies that the key is valid the system may say it isn't because the key is registered for another hardware configuration. While BIOS upgrades and drivers don't usually trigger the alarm, so to speak, it can happen, particularly with a manufacturer's customized version of Windows during the installation process.


P.S. You'll be happy to know that Vista SP1, due out next month, removes the 'kill switch' you encountered, so if it does happen again you'll be annoyed by pop-ups instead of a nearly crippled system.