I have just built a computer for a friend and she would like to use Windows XP.
I have a copy of Vista Business which Microsoft suggests can be downgraded. If I install Windows XP the installer rejects the Vista product key.
Do I need a specific version of XP or do I have to install Vista first and then downgrade to XP?

Before we begin the copy that you are using is fine so long as the license has not been installed on another machine...if it has then you will need to buy a new installation disk and license (COA).

Use the XP professsional installation disc and the COA(XP) that came with the disc and install as usuall. The XP version could have allready been installed previously but you must have the correct key.
After the installation you will be prompted to activate windows....either by internet or by telephone.

Choose to activate over the phone and have the vista business downgadeable license handy. The operator will walk you through the proccess.

Thanks lurks. That was the one option I had not considered.

Microsoft’s previous licensing policies permitted people who bought PCs (with Windows Vista Business and Windows Vista Ultimate pre-loaded) to revert to Windows XP. This means that buyers may exchange their Vista OS licenses for XP without having to pay additional cost.

Microsoft allows downgrades to OEM edition-consumers of the aforementioned Vista variants (including the X64 and Tablet PC editions). Again, only new PCs pre-installed with these versions may downgrade OSs. You cannot easily shift to an XP OS if you have a retail Vista SKU (stock-keeping unit).

Installing Windows XP using a Vista product key will not work, as each individual SKU has a distinct product key. A consumer will not be able to install the OS even if one uses a product key from an installer from the same OS, the same batch, and the same box for another.

If you have Vista pre-installed, downgrade the OS by installing a copy of XP using the included key, and access the activation screen (near the tail end of the installing process). Choose to activate the OS by phone as opposed to online activation. Talk to a live customer-service representative and inform him that you want to shift to XP from Vista. Give the representative the Vista key and he will guide you through the rest of the process.

Recently, Microsoft placed the responsibility of procuring XP installer CDs on users who wished to downgrade. The company currently allows its retailers to offer XP setup discs to consumers opting for Windows Vista. Buyers may request the CDs if the discs are not packaged with the PCs.