Not sure, although it certainly could be with anything that works with internet functions. I didn't have that problem with my legal copy. That Windows Messenger could be a rat too (probably why it won't go away).
The solution is to register or do something else. Or just not use XP.
How your buddy deals with it is up to him.

don't submit problems to msoft when you get an event in xp it will ask to generate a quere to microsoft,
and there you get naild.
 
i have been running xp 2600 pro now and don't use that "rat" messenger fag, and don't SEND any event logs to msoft,
 
i have used windows UPDATE many times now, it has checked my system (and who knows what it has sent to microsofts little private room) and i havn't gone and gotten any nasty bigbrother emails yet......

Well here's hoping that Microsoft stick with their plan for WinXP Service Packs.
Thats the plan where when you install SP's on a known compromised version of WinXP and it locks it straight down.

It runs fine why mess with a service pack,

Oh, lets see...it may have an update to patch some gaping security hole, or prevent some kind of corruption. MS could also tag something on to one of the critical updates too, or something else that most people would d/l to get the software pirates. Honestly, if you've legally purchased a copy of XP, MS can't nail you for it (at least they shouldn't). If you have gotten w4ar3z, that's your problem. I don't mean to be a jerk, but MS does have a right to stop software pirates. I'm not sure I agree with the way they're going about it, but they are making an effort to put a wrench in the works for pirates.
If MS does screw up (heaven forbid!), if you have proof of a legal copy, they have to make sure it works for you.
 
The way to deal with XP registration/activation is to buy a legal copy of XP, or don't use it.

thats why i hate SP's, i'll stick to Hotfixes for severe problems/patches.