Bill decided that the failed WGA could be improved upon. In what MS is now calling a "Pilot Program" the new WGA installs via a patch and is currently optional for now. The new patch checks your PC and will pop up a wonderful window reminding you that your version of windows is pirated after a check of your system. The patch will not allow you to download updates if it finds your software is illegal. The "Pilot Program" will be required for all XP users later this year. I speculate the software will be included with the new MS Windows BORG which will be released following Vista.
I bet there is an entire MS department dedicated to screening Bill's "Flaming Fanmail", I would personally love to see some of it. Don't get me wrong, Im all for enforcing anti-piracy but I think MS takes things too far.