I've been using Windows XP VMs without activation, or even a prompt to activate. I didn't know they even needed activation. Does anyone know what activation is needed for?
1: https://en.wikipedia.org/wiki/Volume_licensing#Leaked_keys
If Microsoft had panache they'd release a final Windows XP ISO that would only take that key.
If you go into properties, does it show XP isn't activated? IIRC, early XP releases didn't nag from the tray. I've also seen some Dell installs that auto activated after pulling the key from BIOS.