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As Mak said, this would be a licensing violation unless you had a mass volume license like corporations and schools have. But speaking on a strictly "functionality" standpoint, it STILL wouldn't work unless all of the hardware in the computer is identical. I.E., if old PC is a Dell Optiplex GX150, where the new PC is an HP dc5850, I'll bet my car that you would get a BSOD upon firing up the newly imaged computer.
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Assuming that the user has an appropriate license, it probably would work but you'd just need a bunch of drivers.
Or if he got a BSOD then all you'd have to do is put in the XP disc and act like you're doing a fresh install and once it sees an XP install in the partition, just choose "Repair" instead of "Install" - that usually clears up whatever the conflict is.
EDIT: In terms of the legality, I would recommend that he calls Microsoft and explain that he's just trying to upgrade a machine, they will likely give him a brand new Key - I have done this on occasion.