When you use System Center Configuration Manager 2007 Operating System deployment (OSD) to deploy Volume License builds of Windows XP Service Pack 2 (SP2) images, "Activate Windows" may still appear in the "All Programs" Start menu after deployment. Since the OS has a Volume License, it is 'pre-activated' and no activation is needed. If you go ahead and click the "Activate Windows" item it reports that the OS is already activated.
This can occur if the Sysprep option for "Do not reset activation flag" is not checked, thus causing the activation flag to be reset, resulting in the "Activate Windows" option to be created in the Start Menu.
To prevent this from happening, there is an option in the Build and Capture task sequence under Prepare OS, under the "Select the following Sysprep options" section called "Do not reset activation flag". The "Do not reset activation flag" must be checked to stop "Activate Windows" from showing up on the deployed OS.
Hope this helps,
Will Swanda | Support Escalation Engineer