Previously, the OEM license was only for installing Windows on PCs intended for sale. The newest System Builder license includes a provision allowing you to install it on a system or a virtual machine for personal use. That's why they don't need to produce a consumer retail box any more.
Ah yeah, I should have stressed the download part. My local Amazon (UK) has an OEM version available on DVD which is ultimately probably how I'll have to do it and then rip it to an ISO. But it's 2013.. c'mon MS.
I updated my win 8 release preview with the $40 price. And i have read online that pirated versions can also be upgraded. Maybe this is a mistake Microsoft means to make. People who pirate mostly aren't going to pay anyways, this way they at least get some money and get to convert non genuine users to genuine ones. A win-win for everyone.
Sorry, I should have said "un-activated." It was a boxed version of Windows 7 Home Premium that I had run out of valid licenses for, so I just never activated it. I was then able to use the upgrade edition of Windows 8 to install and activate successfully. I have since reverted back to my un-activated install of Windows 7.
You could always pick up a copy of Windows XP on Craigslist or eBay for cheap. It's a bit of a pain, but you can still do a full reformat install so long as the installer detects the old installation first.
Alternatively, you could buy the copy of Windows XP, skip actually installing it, and work around the fact that you didn't. Legal i's dotted and t's crossed, pain of installing XP avoided.
I tried the WinXP thing but Bootcamp doesn't support XP anymore and it all starts getting difficult without a optical drive (find drive, rip, copy image to usb,...). I ended up just pirating it out of sheer annoyance and since it was the only way I could get Win7 working.