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Supposedly, and I have not personally verified this, you cannot activate with a generated key. So, if you are using a legit XP Pro OEM or retail then you need to either activate with a issued key or find a workaround to make it beleive it is activated. (example: reset5) or convert your version into corporate. A good guide to doing so is here. hxxp://homepage.mac.com/dbaumgarten/XPloiting_XP.html If you need help PM me.
I do not know why keys would not stick unless they are being generated for the wrong version. Note: Xp pro (non VLK) keys do not need to have a 640 pid. You can try to activate with a generated key and let us know how it goes.
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