Microsoft probably helped you with the stolen Halo key because you paid an absurd amount of cash for the game. The OP didn't pay anything for XP, he just assumed it came with his laptop. Since the original seller didn't have a legitimate OEM license, and didn't buy and include a retail XP package, it correctly stopped working. I see nothing wrong with this, as installing something else prevents Microsoft from gaining more market share.
Sending him your XP CD is illegal and just plain stupid. Microsoft's EULAs bind the OS license to the motherboard, essentially turning Windows into a nontransferable hardware component. That's why they have you put the sticker on your case.
Please do not send him your CD, and do not discuss it further here.... that's another form of software piracy*, and we can't be responsible for or associated with it. If he truly wants to fix his laptop, he knows where to get Ubuntu Linux.
*by software piracy in this case, I mean "things that make Microsoft lawyers waste our time with cease and decist emails and shit like that." I'm sure Refalm and ComSense don't want to fuck around with shit like that, so I'm going to put a stop to it here and now.