Quote: Hardly worth bothering with DRM and legit downloads when this can happen, in anycase I think you're limited as to what you can do with the files, you seem to know more about it CW, is this the case?
My understanding is that the licence files contain information about the PC used to download it. The idea being to prevent you copying the music and the license onto to a friends PC.
Windows Media Player allows you to backup some licenses so that you can reload them onto your computer after repairing (eg changing) faulty hardware... but you have to make those backups before making the repair.
How it knows the difference between a different PC and a repaired PC is anyones guess. It's probably similar to microsofts "Activation" scheme - that allows you to change some items of hardware without requiring you to prove it's the still the same PC.