You aren't legally allowed to modify most of the system files (according to Microsoft), even if you are fixing something that is causing you problems.
You are 100% definately licenced to apply official parches to your windows install media. e.g integrate service packs and hotixes such as you do with nlite. MS state this in thier deployment guide for administrators.
Does anyone have experience with vLite that is supposed to remove the bloat from Vista and make it snappier?
yes, as i said, remove the vlite registry key or else any MS service packs will fail to install. Stripped down versions are NOT supported, because e.g a service pack or patch may rely on something which is not present, leading to an inconsistent state. I would stay away from that aspeact and just use vlite to integrate the vista SPs into your CD.
Server 2008 is the only system where stripping down the OS is formally supported (because its designed with modular design to reduce attack surface)
God knows if it would hold up under the "First Sale" doctrine in the United States or Canada
it would likely fail (as it did in court in europe) because, as the EULA states, software is not sold, but licenced. You arent buying the software, but the right to use it as per those licence terms. Its the same as buying say, a satellite TV subscription. The product (ability to view) is for you in your own home only, and is not transferrable.
Re: MAD HATTER
Modifying Windows was/is not the issue here. And i am not questioning the legality of certain sites. The reason an infraction was given to you by me was because you linked to a copy of windows. An infraction would have been given regardless of where it was hosted or whether it was verbatim or modified. The reason it was given was purely because it constiututed unaurthaurised distribution of copyrighted materials and therefore falls foul of our warez rule.