Mark isn't simply "putting the files there", he has copied an exact image of one drive onto another drive of identical spec. This would be enough to boot Linux or just about any other OS (assuming all the partitions the OS is looking for are on the one disk).

If Mark has done things properly (which given he is the IDE God I am sure he has) then the only difference is that the serial number of the physical hard drive has changed.

I can't believe that not being able to boot XP in this situation is Microsoft's intended behaviour. I think Mark has run into a nasty bug or design flaw. Not that the distinction makes much difference to him at the moment...