What is microsoft oem licence

I built a new computer, I want to install Windows XP Pro. There are 2 options buy a retail box for $ 250/275 or get an full OEM version for 100/125 and install on this computer.

Is buying this OEM version from Vendor and installing Valid and does not violate Microsoft OEM licences agreement.

Is this applicable to other products like Office 2003/2007 etc.
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  1. Installing an OEM version does not violate any Microsft license agreement. OEM offers no online support should you have any inquiries.
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