Ultimately MS, and your conscience are the final arbiters.
Generally moving an OEM license, even if the original machine is dead, is not something that is a right explicitly granted by the EULA, in fact it's usually spelled out that you do not have this right. However, MS will sometimes allow you to activate such a copy if you call them and tell them what's going on. I mean, what is the ultimate difference in replacing a motherboard when one has failed or a new machine?
Furthermore, If the original copy is still in use you might have problems with your conscience or even start failing WGA testing when you try to get security patches.
B
I paid for the software. OEM license or not so my conscience is clear. I'm using a single license on a single machine. I never ran it on two machines at once.**
If your original machine is faulty then i'm sure there is not one judge in all the world who will hold you accountable for moving your valid license to a working machine. The EULA might state that you can't, but there is no evidence that this will hold up in a court of law.
To me OEM licenses should be considered the same as OEM hardware. The exact same as the original just without any of the frills such as fancy packaging or games.
I didn't advocate using one license of two machines. That is against the law.
Although as an aside i used the same OEM license on two XP installs i had on the same machine. I think i was breaking the EULA in some way but i had some hardware/hard drive issues and needed to boot into both versions of windows at the time.
**Actually this whole rule about not being able to move an OEM license from computer to computer is another reason why people pirate it. I can afford a single license but i'm a hardware enthusiast. I'm not going to buy a license for each computer i build.
So because i'm technically breaking the law by moving my paid for OEM copy from one machine to another, why don't I just pirate it.
Also that is the reason why it won't hold up in court.