What is the difference and which one should I buy? Newegg sells oem and on ebay I can find oem and retail versions. I read a review that said oem can not be upgraded.
The OEM version may not have the upgrade option during install as the Retail version would. Only difference, is who you talk to for XP support. In this case, if you buy it from NewEgg...they are your support, not Microsoft. Retail and Upgrade versions bought from store shelves are supported by Microsoft.
OEM versions do not include the manual or "box" packaging. The license cannot be transferred to another pc and updates from win 98 etc, are not supported. You are limited to hardware upgrades... eg, if your motherboard is dead then you cannot install a new motherboard and use the same license. I think you are allowed to make a maximum of 3 hardware changes. Legally, the OEM CD is not supposed to be sold without hardware. Retail versions are supported by Microsoft as Morph416 stated but only for a limited time unless you pay for extended support. Retail licenses belong to the buyer, and can be moved from computer to computer, provided that the license is only ever installed on a single computer at any given point in time. And/or do not exceed the maximum number of installations allowed in the End User License Agreement (EULA) you received with the package. Hope this helps.