May depend on the Windows version. Older versions tend to be more lax than newer ones.
From my experience, it doesn't make any fuss about anything as much as it does the motherboard. XP will ignore a motherboard change some of the time, but I don't think you can get away with it when it comes to Vista/Win7.
Yes, cloning is very legal. It's what you do with the clone that matters. For example, you cannot clone one PC to another similar PC & continue using the same Product key on both. G