It turns out that Microsoft has created an application for system administrators and PC makers that allows you to put the system into a 'factory mode'. The result is that you have an unactivated OS with a 30-day grace period to activate again.
The tool is called SysPrep which you can download with a set of tools provided in a cab file from Microsoft. Here are the steps to follow:
1.) Boot into safe mode with the command prompt option.
2.) Run 'explorer'.
3.) Export the files from the cab file into some location via 'My Computer'.
4.) Run the sysprep executable.
5.) Choose the "factory" option (the system will shut down when the operation completes).
6.) Boot into Normal mode.
7.) Restart the system again (your system may reboot automatically if you try to log in).
8.) You can now use Windows XP for 30 days and/or reactivate.
Note1: If the SysPrep window continues to open every time you restart, rename the folder where you saved the tool to something else.
Note2: This process is repeatable in the event your grace period expires or the activation gets confused again.