Yep - that's the reason for the price difference between OEM and retail versions. The retail versions allow an installation to be moved from one PC to the next. The OEM versions are tied to the 'non peripheral' hardware that they're originally installed on - and by that Microsoft mean the motherboard (although it's not clearly defined - in their eyes different motherboard means different PC).
To check the hardware it's installed on windows generates a string of numbers that's related to your hardware. This includes type and speed of processor, amount of RAM, graphics card, network adapter, hard drive etc. On booting it checks this against the string of numbers generated when it was activated. You are allowed a few changes, to allow for upgrades etc. If there are too many changes, Windows will deactivate itself. In the case of some changes it will reactivate itself online, which I recently had to do after installing a new hard drive. Too many changes and it's a phone call to Microsoft to explain yourself.
I once replaced a faulty motherboard and the OEM copy of XP wouldn't re-activate online. At that point it's entirely at their discretion whether they re-activate your copy. They let me re-activate my OEM copy after establishing that the original motherboard was 'permanently' out of use. That's down to the grace of the person on the phone. Stricly speaking, according to the EULA, they could have refused to reactivate it.
Really - if you want to move installations (or upgrade motherboard) every so often you either need to go retail or get a new OEM copy for each PC.