It looks like Micrsft has fixed the problem (a little earlier than they expected)
go here for the info/fix
DRM and overly zealous copy protection schemes rear their ugly head again. Although there’s no official word from Microsoft yet it appears that the Microsoft WGA (Windows Validation) servers are down which means valid copies of Windows Vista and XP are entering reduced functionality mode with features like Aero and DirectX being disabled when the Operating System phones home to validate.
To add insult to injury this was the response one Microsoft customer received from their support staff after an email exchange about the issue
“Thank you for your response.
I’m sorry to inform you that the Windows Genuine server might be down for few days. I have escalate the issue to our Genuine team, kindly try to validate again on Tuesday 28 Aug 2007.
Thank you for contacting Microsoft Technical Support.”
This is further proof that these elaborate draconian copy protection schemes only serve to hinder legitimate users in their use of the product. I’m sure pirates are quietly and confidently using their illegitimate Windows installs right now all warm and fuzzy in the knowledge that their hax0red copy of Windows stopped checking in with Big Daddy back home in Redmond long ago.
Not to be too smug or anything but it’s times like this I’m glad I made the switch to using Linux and OS X.