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#11
I've never heard of not being able to reinstall the native OS which came with a PC because of the size of the HD. You're entitled to reinstall that XP for the life of the machine no matter what hardware changes, except for the mobo.
You don't mention if or where the Ultimate Upgrade you bought is currently installed - are we supposed to guess this? Unless it is currently being used on another PC you most definitely can move it wherever you want as long as there is a qualifying copy of XP or Vista involved - though it doesn't have to be installed.