If the shop only charged you a fiver for XP then they've undoubtedly given you a pirated copy, as Microsoft charge even the biggest companies at least £45 for a license. Microsoft blocked most pirated License keys from installing SP1, but they only blocked the most common 20 keys from installing SP2, it looks like you were unlucky.
Step 1 would be to report the shop to Microsoft, then take advantage of Microsofts very generous offer to give you a genuine license, click here, After you have obtained a genuine copy you can patch to your hearts content.
Regarding your prob with loading service packs on to your op/sys.
This is because Windows has been loaded with a pirate copy probably starting with the regstration code of FCK................ect.
As M/soft new at a very early stage, there were many pirate copies out with this code they built in SP1, detection s/ware to prevent updates being installed with said code. I belive there were 1 or 2 other codes as well.
The only way round this is to change the reg code with a non restricted one or buy a new copy of XP.
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