As a heads up yes you can activate win xp pro with a generated key.
I did it with a purchased copy of xp pro and after the 5th time of screwing with m$ activation for whatever reasons I generated my own activation key.

I guess the updates for sp2 aren't going to work, BUT I have a bought copy so I can just update with the good key.

On the unhappy note ( or my .02 cents) I won't be updating to sp2 for a bit, gotta let the cobwebs settle.

The first time xp crashed was the very first m$ update on the new machine.

Hope this is helpful, and if anyone wants pm me for the key generator I used.

Dr Pete