Yes Contact Microsoft and they can help you.
No they wont. If you have an oem version of windows, even if it is an activation, install, even being able to use it problem, its 35$ to get microsoft to help. Support including activation (which your copy very well may not have if it is hardware locked), is not microsofts problem. you can provide a legitamate serial number as well as proof of purchase. Tech support including support to even get it installed or running) requires pay support. Of course I was told that paying tech support for my oem copy would get me limited tech support in the future (for a year if I recall right).
Its not allowed to discuss ilegal thing here. this may or may not be legal but it is a grey area that is pretty moral. See if you can get someone elses retail copy of windows xp. Install it and when it askes for your serial number, use the one listed on your case, not theirs(there should be a licenced windows product sticker on the back of your case with your serial number). It used to work most of the time but who knows with all the new activation and verification crap. Even with the new stuff though, activiation and verification usally has a phone number if ther cannot be automatic aproval. Call them bitches, do not tell them that you used someone elses copy, tell them it was on your computer, give them your legitimate serial number (you paid for the use of this operating system, you should be able to use it).
Yopu might even try your serial number with a downloaded copy (the downloaded copy is way ilegal, and downloading it is illegal, but installing it on a licienced computer with a proper serial number attached? the means is illegal but the end result is legal, so who knows????
Fyi, I have dealt with this crap too, if you couldn't tell. One of my full versions of xp was actually sent to me for free by a microsoft employee. I was dealing with an oem version that wouldn't work (tried it with every original piece of equipment in the system but diffrent motherboard so probably bios locked). I am the kind of person to very extensivlly persue the matter both with the computer manufacture and microsoft. I got nowhere. This microsoft employee felt that microsofts verification etc. was nesasary and easilly took care of most customers but knew that some people fell through the cracks and got cheated out of their legal paid right to use the operating system. Employees at microsoft don't always like the way things are done from what I was told. I have since bought another leagal copy (multiple computers), though not because I felt I owed microsoft, but rather since my previous problem was worked out by a microsoft employee that saw it was wrong.
Fyi, contact your computer manufacture first. Tell them that you cannot recover and request an install disk. It might be free, it might be cheap or it might be a ripoff (try legal means first). IF you have a windows serial number and a licienced computer, they should help you. Fyi, do not tell them if you have changed equipment at first. Thats a good way to get ignored (you have support for your computer but not for the new equipment, would you like to pay for tech support for your new equipment, even though it is not the problem).