A few thoughts...
1. The Activation function is used to stop the software being used on a number of machines. It records the serial numbers of your kit's components, and sends these off to MS; you can then change a few (3?) things before you have to have a chat with MS, which would be a formality. If you have to reinstall your copy on the same machine, this does NOT count as a new activation, although you will have to reactivate.... if you see what I mean!
2. In defence of XP - I find it stable, faster than 9x, and, now that the drivers are coming through, very easy to configure.
3. As for the security thing, yes, MS should have got it right first time, but the patch (on my PC anyway) downloaded silently in the background, and on next reboot, was done.
4. Linux is fine to a point - if you can get all your drivers (which can be a pain). Also, I'm a believer in that the only reason Linux seems more secure is that the virus writers haven't got round to it yet - there is more fun to be had with 9x because of the volume of users. When you get many millions of Linux folks out there, watch out.
5. The Windows Upgrade site did seem to have a few teething probs, but now seems OK....
TA