Windows Genuine Advantage (WGA) is an anti-piracy system created by Microsoft that enforces Microsoft Windows online validation of the licensing of several recent Microsoft operating systems when accessing several Microsoft Windows services, such as Windows Update, and downloading Windows components from the Microsoft Download Center. Specifically, WGA covers Windows XP, Windows Vista and current testing versions of Windows 7.

http://www.youtube.com/watch?v=xj-4TUHyM-Q

The failed validation installs three types of notifications on your computer: one on the log in screen, one log in timer, and one balloon. It also stops updates from Microsoft and disables your ability to install IE7 and Windows Media Player 11. [via]