Now this is an interesting problem:

Another problem is the fact that Microsoft won’t be offering this service patch to those who hold pirated copies of Windows XP, which is reasonable enough, but there are a lot of illegal copies out there, especially in the Far East where a lot of worms get a quick foothold in the Internet. SP2 will apparently check Product IDs looking for known pirated copies and will not install on systems with bad Product IDs. This is understandable, but will reduce the overall effectiveness of the security upgrade.