To clear up some misconceptions in this thread.
You can use a SP2 XP disc with SP1 keys, it works fine.
You do not have to use the Dell Recovery CD, you can use any matching XP install disc.
If the system wont accept your key, or wont let you activate, call Microsoft, the number is provided in the activation window. They will provide you with a "key" to unlock activation. Microsoft stores activation keys for 6 months, so if you try to reactivate before the 6 months is up you'll be prompted to call again.
I reinstall XP on customers computers several times a week, I use the same OEM XP Pro or Home disc for each one. Dell, HP, Compaq, Emachines, doesn't matter who made the computer, the install always works fine using the key sticker located somewhere on the computer.