I don't think even microsoft expects everyone to get a legitimate license of their product, regardless of what the law or the EULA says. They advertise their student/teacher copies of Office a lot, allow anyone to buy it (some stores may check, but definitely not all) and allow multiple computers to use one license as well.
As for getting a legal copy of windows xp for cheap, guess your only way is to buy it used, since enrolling in school isn't exactly trouble-free, and you have to stay a student to have it remain legal. The way to get a legit new copy is to buy OEM with a power adapter or fan or whatever, I guess. I've always wondered to what extent that really satisfies the conditions of OEM sales, but MS doesn't seem to have much of a problem with it right now.