Microsoft's licensing policies make my job easier. I can count on writing a few newsletters each year (and one or two Wired Windows columns) on the annual changes to the various licensing schemes dreamed up in Redmond. The latest bizarre situation, though, was discovered by my Network World colleague, James Gaskin, who writes the Small Business Tech column (see link below).According to Gaskin, you cannot legally back up Windows XP.You should read his column as he relates how he went round and round with the Microsoft press relations machine. Evidently, even people who work for the company can't read the End User License Agreement (EULA) and understand what it means.Gaskin is referring to a "full image" backup, which copies the various modules of the operating system to an external device - tape, CD, another computer, a network-attached storage (NAS) device or a storage-area network (SAN) device. It's pretty straightforward in the text of the EULA, but gets very convoluted when Microsoft tries to explain it.It gets to be even more fun when examining the various licensing possibilities of the recently released Windows Virtual Server 2005. You'll remember that this is the first server version of the virtualization software Microsoft acquired when it purchased Connectix a couple of years ago (see https:\/\/www.nwfusion.com\/newsletters\/nt\/2004\/0705nt2.html for more on the technology and what you can do with it).Virtual Server 2005\u00a0needs its own license, of course. Plus a server license for the underlying host system (Windows Server 2003) and licenses for the various virtual machines it's running - NT 4, Windows 2000 Server or even Windows Server 2003. Should you be running other server products (SQL Server, Exchange Server, Biz Talk Server, etc.) then additional licensing are needed. User machines will each need Client Access Licenses (CAL) for the various products. Even Microsoft's own summary page for Virtual Server licensing (https:\/\/www.microsoft.com\/windowsserversystem\/virtualserver\/howtobuy\/default.mspx) appears to get it wrong when it says:"To set up virtual machines on a server, each installed copy of the Windows Server operating system must be separately licensed. For example, if you are setting up four virtual machines on one server to run one instance of Windows Server 2003 and three instances of Windows NT 4.0 Server concurrently, you will need one Windows Server 2003 and three Windows NT 4.0 Server licenses."You'd actually need two Windows Server 2003 licenses since the host operating system needs one in addition to that needed for the "guest" 2003 server.The CAL licensing can be tricky, also. According to the licensing requirements for CALs, the CAL must be of the same or later version as the software being accessed. Suppose you have a client accessing a service on an NT 4 server. All that's needed is an NT 4 CAL. But move the NT 4 so that it's a guest system running within Virtual Server 2005 and you'll need to upgrade to a Windows 2003 Server CAL, since that's the underlying host system being accessed by the client.Then there are the servers - such as Biz Talk Server, Commerce Server, some implementations of SQL Server and many more - that are licensed on a "per CPU" basis. If you're running four partitions on a two-CPU virtual server with Biz Talk Server in only one partition, logically you'd only need a half license. Doesn't work out that way, though.If you're thinking of running Virtual Server 2005, or just want to see how convoluted licensing can get, download and read "Licensing Microsoft Windows Server and Other Microsoft Server Software in a Virtual Machine Environment" (https:\/\/download.microsoft.com\/download\/2\/f\/f\/2ff38f3e-033d-47e6-948b-8a7634590be6\/virtual_mach_env.doc). Then have your legal team read it and (hopefully) explain it to you.