Neil,

Microsoft Licensing is one of the most complicated schemes I know.

Ian is right in that the majority of shelf-bought PC's come with what MS call an OEM licence.

This basically means the licence allows you to use the software (namely Windows operating systems and MS Office products) on the machine on which it is purchased. If the machine dies or is formatted the software goes with it cos under an OEM licence you do not get any disks. Naturally you pay less for an OEM licence compared to buying the software off the shelf (where you get disks/CD's etc as well as the licence hallmark certificate) - When I say you pay less I mean the supplier of the hardware does cos they get the software and install it on the machine for you prior to it being sold to PC Wo**d, etc.

To get disks with your software you have to buy the packaged product and then your licence covers you for installing that software on various machines, unless you're a business customer.

Hope this clears it up for you.

Dell are actually one of the better manufacturers and I couldn't build one for the price they knock em out.
However the compromise with the cheaper ones is in the components, things like on board graphics and riser modems are OK for the average user but if you push them in the performance department (gaming/graphic intense software) they do start to struggle.
So it's a must when buying a new PC to consider what you want to do with it.
I've built a few budget ones for people who then want to play the latest games etc only to find out they don't work to well. When you consider the operating system is £100 alone what do you really expect for £400.
Also the cheaper ones are almost impossible to upgrade a few years down the line, worth considering because a more expensive one may be cheaper in the long haul.
My current PC is over 5 years old and by progressive upgrading, around £100 a year it is only just short in specification of the current high end machines. So I guess the key is to do some research read the PC magazines (yawn) prepare to pay a little more and carefully select your components. It's worth it in the long term.
Hope this helps someone.

Fods