Hi,
I don't believe licensing is too concerned with the virtualization platform being used (KVM vs Xen vs HyperV vs ...etc... ); and different flavours of windows have different rules regarding virtual instances permitted per 'physical seat' of XP.
My recollection,
XP Pro (desktop OS) - is a 1:1 ratio; if you buy a license of XP you may run one instance (physical or virtual)
Server 2003 - standard edition - has a 1:1 ratio - as per XP Pro
Server 2003 - Enerprise Edition - has a 4:1(*see below) ratio - you may run 4 VMs of Server EE2003 on a single physical host if you own one license of EE2003.
Server 2003 - DataCentre Edition - has an N:1 ratio - you may run as many VMs of Server DCE as you choose *on a single physical host*
To me, it seems no huge coincidence that the 4:1 VM:Seat ratio for Server2003-EE is also reflecting the fact that Server2003 EE costs about 4 times as much as Server2003-standard edition. (of course there are various features that distinguish the products as well - ram,cpu cores supported, etc - but this detail alone always amuses me
- ie - you can't get 'cheaper server 2003 instances' by purchasing Ent.Edn and then running VMs with it - as compared to buying 4 seats of StdEdition 2003 server.
Obviously, if you have 'really high end' single physical hardware host running DataCentre Edition, you "might" be able to get 'cheaper' Server2003 -per-instance-effective cost; but I suspect that once you start paying for 4-socket or bigger iron, the price-per-instance of Server2003 is going to be the least of your worries from an 'economy' perspective.
MS also now distinguishes between "creating and storing a VM Image" as different from "creating and running a VM". ie, you may now create and store as many VMs as you wish, without 'consuming a license' for each stored instance. Your license requirements are determined primarily by the number of actively running VMs.
This stuff is "fairly clearly detailed" at the URL,
http://www.microsoft.com/windowsserver2003/howtobuy/licensingr2/overview.mspx
Of course, Vista/Server2008 has its own VM license rules (which are fairly similar in general, I believe). The new Windows 7 will likely bundle a virtualized XP environment (and XP license) at least in some flavours of the product (for added backwards-compatability support reasons, yay - twice the support footprint, how can that be bad ?!
I may have some of this off somewhat, but I think this captures the general flavour of the fun.
Clearly, virtualization is much more 'fun' with license-free OS / platforms
- no fiddling around with all this stuff.
--Tim Chipman
Fortech I.T. Solutions
http://FortechITSolutions.ca
(* - caveat note on the 4:1 ratio for Enterprise edition - after reading the article you had linked above in your post: You MAY run 'five' instances, IFF and only IFF, your physical host in question runs the '5th seat' Windows platform exclusively as a host upon which virtualization and management of virtual machines takes place. You cannot host other services on this 'virtualization host' (that happens to be a windows system). So - for example - no database or web services may be hosted on that physical host OS; only a virtualization layer, upon which you would run up to 4 VMs of Windows Server). This makes a bit more sense with HyperV-Server2008 since this windows platform inherently supports "type 1 hypervisor virtualization" (more or less) - whereas Windows Server2003 .. does not .. rather you would (ugh) use "type 2 hypervisor virtualization" (VMWare server type product / old school VMWare) - or most likely, simply not use Win2003Server as your virtualization platform; dump the '5th seat' and stick with 4VM instances of Server2003 for each physical 'license' of Server2003-Ent.Edition which you own - and run these VMs on whatever virtualization platform you like - XenServer, Xen, Virtual Iron, KVM/ProxmoxVE/etc etc etc).