Sitting in my drafts folder in Windows live writer is an entry called "Lies, virtual lies and slashdot postings" ...  You can read our retail license terms online. MSDN, Technet, and volume licenses have different agreements. We posted the Vista license agreement a little while ago and dozens of interpretations appeared; including a bunch a stack on SlashDot.  

Microsoft people are told not give their own interpretations of licences because if we get it wrong, at best it upsets people, and at worst it means we give away rights to do something.  The reason I never posted "Lies, virtual lies ..." was because I was getting too close to doing that.We took the original agreement down, and a modified version has  appeared. This too may change, but it's worth taking at look at how it stands now - without, of course, giving any interpretations.  

The original version the licence confused people about copies which could be made. This version says for all versions. "You may make one backup copy of the media. You may use it only to reinstall the software."  I don't see any limits about what form that can take. Because we expect ultimate to be used in both business and home settings it has extra terms about installing and running from a file server.

"Home only" versions don't include remote desktop; Ultimate is both home and business. One of the differences between basic and premium is the number and type of connections they allow.

One thing that has changed from the original retail licence is the right to transfer the OS. OEM copies of Windows are only licensed for the computer they are sold with, but people expect to be able to transfer retail copies; a restriction in the original licence which upset a lot of enthusiast has now been removed, and so it reads  "Software Other than Windows Anytime Upgrade. You may uninstall the software and install it on another device for your use. You may not do so to share this license between devices."  Note that Windows Anytime Upgrade software has additional conditions.

Unfortunately it is still possible to read two different meanings into the terms on Virtualization, as Ed Bott has pointed out.  However we told techweb that retail copies of both the Home editions are not licensed for use in Virtualized environments. I haven't seen the MSDN terms that apply to Vista, but my expectation is if we give developers a way to test all the different versions in Virtual Machines, that will be the way we do it.

I know that in the betas of Vista it was possible to use the Ultimate Media to install the other versions - though I never actually went through with it, so I don't know if an Ultimate license key will activate one of the lower versions - after all you can view any of the others as Ultimate with some features disabled.

Finally on virtualization there is some confusion about how many Virtual copies of vista you are allowed to run with Retail/Ultimate and Software Assurance licences: hopefully that will be clarified before the product goes on the shelves. When the document is clear enought that people don't ask me to interpret it for them , I will be able to file this under "Thank heavens for that."