I don't recall M$ producing an upgrade version of XP; AFAIR the full version does upgrades too.
If the computer came with a restore disc, chances are that the key is for an OEM version of XP Home and I would imagine you're trying to install a full version. This won't work - I found that out the hard way
If this is the case, get an OEM version (9-in-1 warez releases abound) and install using the PID on the sticker.
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