Originally Posted by kregg
With Windows Genuine Advantage, it doesn't store data about you, it just collects your serial number, compares it to a blacklisted list of serial numbers (due to being copied, faked, etc) and then tell you that the software is genuine/non genuine.
This cannot be done offline because Microsoft needs to check against it's online black list of serial numbers.
If you want to use Windows XP on multiple computers, you will need to buy multiple licences from Microsoft, or otherwise you run the risk of being non Genuine.