Back on July 20th, Paul Therrott wrote a long blog entry explaining his experience with WGA (I stopped it from installing so I didn't try to work with it). His big problem was that WGA reported that his version was pirated. I think he (and most of us) assumed that WGA was not working correctly.
Read down to the end of the article. It looks like he got with Microsoft and worked it out...guess what? He has a pirated version of Windows. The online retailer that he purchased it from actually sold him a pirated version. Wow. Funny...sad...still no reason to push WGA down as a "security update".