Chitse,
Right now, your computer has a Volume Licensing edition of XP Pro installed (Line 8), and that installation was done with a now-blocked Volume Licensing Key (VLK) (Line 2). VLKs are blocked by Microsoft at the request of the original keyholder for such reasons as the key was lost, stolen, compromised, misused, or expired. Also, MS may have blocked the key if it notices a pattern of misuse, ie, more installations of XP using that key than authorized.
As a rule, VL editions of XP should not be sold to individual consumers. Businesses, schools and gov'ts normally use VL editions for flexibility in installing many computers. Also, a Volume License for XP is an upgrade-only license and can never be used as the original or base license for XP on a computer.
If you search the forum for the part of the VLK reported by the mgadiag utility, KP686-D8T7X-HDMQ8, you will see that about a dozen other posters have submitted reports with that same blocked VLK
This is why you were seeing the "software counterfeiting" messages on your computer, because the current installation of XP is an unauthorized installation.
Next, look on the computer or with the materials you received with the computer or with your retail purchase of Windows to see if you have a Certificate of Authenticty (COA). If you have one, tell us about the COA. Tell us:
1. What edition of Windows XP is it for, Home, Pro, or Media Center, or another version of Windows?
2. Does it read "OEM Software" or "OEM Product" in black lettering?
3. Or, does it have the computer manufacturer's name in black lettering?
4. DO NOT post the Product Key.
Not sure what to look for? See this page for reference: http://www.microsoft.com/resources/howtotell/en/coa.mspx
