My windows xp license comes from an MSDN subscription; there's no orange sticker with the product key. I wanted to start over with Parallels, because one of my windows vm's had eaten itself. (When I start the vm, I get an empty pale blue screen with a sedentary pointer. It used to work. The joy of windows.) To find the product key, I ran Magical Jelly Bean Keyfinder in one of the vm's that hadn't eaten itself yet. Easy as pie, there's my windows product key.

Now I'm rebuilding my windows vm's with Parallels 2.2, following this carefully planned strategy:

Create a new clean VM using Parallels' Install OS feature. Do not use the Express Windows XP Install; the express install requested the XP SP 2 disk, which I don't have sitting around. The express install gave me a pre-hosed VM, so, I recommend the custom windows XP install. Don't turn on auto-update; developers will want to manage their updates themselves. You'll need to enter your product key here.

As soon as the initial install is completed, before running Windows Update, clone that VM, saving a clean copy of the fresh install into an always-clean image. (Does that sentence say 'clean' enough?)

Run the cloned VM, and now run Windows Update. I also let windows activate at this point, which I hope doesn't muck things up later.

Clone that VM, the uptodate, clean one, and save off a copy.

Run the cloned VM and install Firefox

Clone the uptodate-and-clean VM again; install cygwin.

and so forth.