The only protection Microsoft has on its CDs is the serial number (product key), and with Windows XP there is a whole new procedure you must have heard about. They don't even check for label of the CD.
As marty140 said, when you get reading errors when you try to backup the original CD, it is most likely due to physical damage on the CD, rather than a protection scheme.
Don't know what Blindread makes of the CD, but you could try a different kind of software to do it. Nero has my preference for most things. Perhaps it is a good idea to check the option that it will first copy the image to the harddisk and from there burn it on CD.