XP Activation

I was cleaning & found an unopened package that contains my XP Pro SP2b English 1pk DSP CD,
can I activate this on a new/clean HD?

If unused YES.

I don't believe it's in use, I've never opened it. Also, is activation different since it's OEM & not retail?

THe base of Win XP is the same as Windows 7:
Activate Windows 7 by Phone
Activate Windows 7 Online

OEM and Retail disks are different creatures when it comes to XP. So OEM keys cant be used with a retail disk and vice versa. Otherwise, in either case, activation would need to be done online against MS servers.

Also, OEM isnt transferrable to a different mobo or machine while retail is.

Ok, I understand so far; but 1 more question.
Since support for XP SP2 ended July 13th, 2010; will there be a problem getting updated to SP3?

No, XP should automatically get updated to sp3 via windows updates. You can also download the pack for future use manually.

Download Details - Microsoft Download Center - Windows XP Service Pack 3 Network Installation Package for IT Professionals and Developers

The only caveat you'd have is if you activated it on one computer, and then later decided to run XP on another computer. Your results may vary, but according to the EULA, you wouldn't be allowed to use this license again with another computer...only the one you activate it on initially.