Yes it is, if the COA is Vista Business you are entitled to downgrade rights so you can install Windows XP Professional. A Dell Reinstallation CD will be unlocked when installed via a Dell BIOs and it will be activated with a Dell System Locked Preinstalaltion key and so there will be no need for phone or internet activation. I would advise making a new XP CD and slipstreaming Service Pack 3 on it as instructed in my wiki here. Then following my wiki A Clean Install of Windows XP (perform the step with DBAN).
II have an old Optiplex 745 that I am wiping so that the system can be given to a non-profit / charity.  Actually, I'm doing it for a friend who used to have a small business.   The system has the COA with the copper and silver strands.  It's old so it looks a bit ripped, but it may be one of the "voiles" that I found mentioned on MS.com. ([URL]#PCPurchase)   The COA says Vista Bus OEM.  The OS was XP Pro, and the invoice shows "WindowsXP, XIMAGE", so I assume that was ordered when one was allowed to get the old O/S installed instead of the new one, right?   I don't have an original CD from the owner, but I have one myself for my Dell  XP PRO system.  Is it legal for me to use my CD?  If I give the printed out invoice to the charity, along with the computer and COA, will they be OK if audited?  Will I be OK?   I want to do this legally.  I am NOT wanting to do something wrong.  I've read all sorts of Licensing documenets at MS, and think this is OK but I want to make sure.  When the O/S came up it did not ask me to enter any code, and it d/l's updates just fine so it seems to be validated.   If I need to wipe it again and junk it I will, but the charity sure could make use of this.
Question about wiping Hard Drive and validating XP PRO