RAJINDER:
Occasionally we have had some customers that purchased valid copies of Windows or received them when purchasing an OEM system but failed validation. In most cases this has been determined to be the result of the actual Product Key used to install the current version of Windows XP to be blocked. This most often has occurred by the computer being repaired and a Blocked Product Key being used on the computer at that time.
To confirm there are no other blocking issues with your validation such as clock out of synch or IE settings blocking the validation process please run the WGA Diagnostics located here:
http://www.microsoft.com/genuine/diag/
If everything here is confirmed as functioning properly and you still have issues validating could you please run the wgadiag tool here and post the information for us.
http://go.microsoft.com/fwlink/?linkid=52012
Without actually posting your Product Key in this post compare the last 15 characters of your COA to the last 15 characters in the Diag output. If they are not the same you will have to change the product key. The easiest way to do this without having to re-install applications or lose data is to refer to the Repair Method in this KB Article.
http://support.microsoft.com/kb/315341/en-us
Warning: as with any such major procedure it is highly recommended you backup all critical/personal data on your computer that you would not want to lose and ensure you have the software to re-install your applications should something happen.
We can also attempt to change the key using the Product Key Update tool below. The Genuine Advantage Product Key Update Tool is only valid for users attempting to change their current non-genuine Product Key to a genuine COA sticker or genuine Product Key – all without a reinstall! http://go.microsoft.com/fwlink/?LinkId=50346&clcid=0x409
Note: This is provided no core system files are corrupted. If they are you will need to complete a clean install of your system.
I hope this helps,
Greg