(mainly because MS likes to do bug fixes in SP form and not through regular patches or software updates like mas os x)
MS puts bug fixes on Windows Update often. SPs often include all previous updates, and yes, some new updates and bux fixes, and sometimes new features. I also usually find that MS offers bug fixes more regularly than Mac OS X, since Apple likes group their bug fixes and updates for one "big" release every few months.
OEM
Original equipment manufacturer
It's the version Dell buys from MS or HP from MS. The biggest cost in software is usually the packaging and OEM you get a CD with a paper in a yellow envelope. You still need a license to run so I recommend looking at NewEgg.
http://www.newegg.com/Product/Product.aspx?Item=N82E16832116515
This one comes with SP3 already loaded onto the disc.
The cost of the packaging is something like 5 bucks and does not account in the 100 dollar minimum difference between OEM and retail.
The difference is purely the license.
OEM allows you to install the copy on ONE computer and you CANNOT transfer the license from one computer to another. You can reinstall on the same computer as many times as you'd like.
Retail allows you to install the copy on ONE computer at a time and you CAN transfer the license from one computer to another (you will need to erase the copy from one computer before putting it on another). Once again, you can reinstall as many times as you'd like.
This is purely from what the EULA says and MS's stance on it. Breaking the EULA is your own prerogative.
My cousin says he can give me his copy of xp home sp2 oem. What's oem? Is that bad?
If he's using this copy on his computer or, if he has, in the past used the copy on his computer, technically, you cannot use it. If this copy is from a Dell, or HP, or some other computer, I suggest that you not use that CD, as:
a) The CD checks the BIOS to ensure that the computer that it's being installed on is the one it's supposed to be installed on, so it may not even install to begin with.
b) If it does work, it will likely have pre-installed drivers that will give you nothing but headaches and heartaches.