Check out my SuperUser Blog post on transferring a Windows licence to another machine, the same rules apply.
Basically the following two sections of your licence are relevant:
INSTALLATION AND USE RIGHTS.
One Copy per Computer. The
software license is permanently
assigned to the computer with which
the software is distributed. That
computer is the “licensed computer.”
and
ADDITIONAL LICENSING REQUIREMENTS AND/OR USE RIGHTS.
Use with Virtualization
Technologies. Instead of using the
software directly on the licensed
computer, you may install and use the
software within only one virtual (or
otherwise emulated) hardware system on
the licensed computer.
Effectively you can use the copy of Windows on the host or the guest machine, but not both at the same time, otherwise both copies need to be individually licenced.
In the blog post I have linked to a Microsoft site where you can find licences for all Microsoft software so you should be able to find out your rights.