GLC,
The process of using the Key Updater Utility on a nongenuine computer is a one-time process. If you use it more than once, it will return the error message you posted.
In order to "re-genuine-ize" a given nongenuine installation of XP, you will have to use the genuine MS XP CDROM that has been shipped to you and run either a repair reinstallation or (preferred) a full clean installation.