Miki,
If you still have the nongenuine XP installed, please follow these steps for assistance:
Step 1 is to run the utility at this link http://go.microsoft.com/fwlink/?linkid=52012, then click the Windows tab, click the "Copy" button, then paste the report into a response in this thread.
Step 2 is to 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 Authenticity (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
You can file a report with Microsoft regarding the business here: http://www.microsoft.com/piracy/default.mspx
And personally I would encourage you to inquire of the police and civil authorities in your locale about what they can do about the suspected piracy.