OEM is not legal as it is for sale only with a new computer (or I have heard that a new hard drive qualifies).
If you're not going to go legal, then why bother buying at all (well sure its convenient, but...)?
You'll need retail... to be properly legit.
The cheaper/better way i find is to get a paid technet subscription - something like 500/yr, but then you get access to EVERYTHING microsoft make, including new versions as they become available. all versions of windows, all versions of office, virtually all their enterprise applications, etc.
Depends how much of their stuff you use though.
Actually, both are perfectly legal. The main differences are below:
Retail version:
- it is NOT tied to a single machine configuration. As long as you remove it from the previous machine, you can install on a different machine with wildly different specs without re-activation;
- phone tech support;
- both 32-bit and 64-bit versions come on the same install disc (at least this is true for Win7);
- retail packaging.
OEM version:
- less packaging materials;
- no phone tech support (not a loss, not many people need this anyways);
- you must choose between 32-bit and 64-bit at the time of purchase.
None of the above is really important, but this part is:
the OEM version is RESTRICTED TO ONE MACHINE CONFIGURATION ONLY. When you activate it on the first time, the key is attached directly to that one specific configuration. If you need to somehow reinstall the OEM version of Windows (e.g. hard drive died, logic board replacement, etc.), you must call Microsoft to get a validation code to re-activate the copy on a new machine configuration.
If you use an MBA or MBPR, the OEM version is perfect since you're unlikely to change the hardware inside (well, you can't change anything except the storage anyways). Classic MBPs and desktop Macs would be better served with the retail version, although the OEM version can also work - as long as you don't mind the re-activation part.
Some stores require you buy a computer part to go alongside the OEM copy, while other stores allow you to buy it standalone.
If all you need from Microsoft is the operating system, a TechNet subscription is way overkill, as the retail Ultimate version of Windows is at most 2/3 of the yearly sub price.