At least one vendor is selling OEM copies of Microsoft’s new Windows XP Media Center Edition 2005 operating system online, possibly exploiting a loophole in Microsoft’s contracts.

Houston, Tex.-based Inc. is selling the OEM edition of Microsoft’s software on its web site for $129.99, as well as the accompanying remote control for $43.99. That’s substantially less than the $299 Directron is charging for the retail boxed copy of Windows XP Pro.

Microsoft executives said Tuesday that they do not plan to sell versions of Windows XP Media Center Edition 2005 at retail. For the first time, however, the software is being made available to legions of “system builders,” white-box makers who can purchase copies of Microsoft’s OSes through special programs.

Directron, however, appears to be using this loophole to sell the software directly to consumers. An ExtremeTech analyst was able to successfully purchase the Windows Media Center Edition 2005 software as a standalone product from Directron.

The new release, dubbed “Symphony,” represents a broader licensing model than Microsoft has employed in the past with its Media Center software.

“In the past, we’ve used large OEMs” to distribute Windows Media Center, said Joe Belfiore, general manager of the Windows Media Center program at Microsoft, in an interview earlier on Tuesday. “Now we’re going to be adding a wide variety of system builders, who will offer an incredible range of choices.”

Microsoft does not plan a retail release of Windows Media Center Edition 2005, Belfiore said, although he added that he would not be responsible for the decision to offer a particular product at retail.

Sources have indicated that Microsoft’s choice is because the company is concerned that the “experience” of a custom-built Windows Media Center Edition machine may be inferior, due to the user’s choice to include parts not properly tested with the OS. Microsoft announced the “Plays For Sure” logo program Tuesday to ensure that Windows Media Center devices will interoperate.

For his part, Belfiore said that building a Media Center PC “might be too difficult on its own. It may be better suited for OEMs right now,” he said.

If Microsoft permits the OEM software to be sold to individual users, however, they will be able to build their own Media Center PCs.

“OEM copies” of software are designed to be shipped to OEMs, who install them on large numbers of PCs through automated processes. In the past, OEM versions of Windows XP and other OSes have shared common ID numbers, which have allowed them to be illegally copied. Retail copies, by contrast, have used unique ID numbers. In this case, however, the OEM version of Windows Media Center 2005 is the only version available.

On the surface, Directron seems to be adhering to the “system builder” restrictions in Microsoft’s contracts. According to system builders interviewed at Microsoft’s launch event, the software can not be sold unless it is part of a system, or “accompanying hardware,” according to one OEM. In fact, Directron’s product page indicates that the software “must be purchased with hardwares (sic) or systems”. “When and if purchased with a system, we’ll install the software but will not activate it,” the product page adds.

The OEM version of the Windows Media Center Edition 2005 software was also advertised in an email Directron sent to prospective customers, as well as on its web site.

Directron was not able to be contacted for comment at press time. The site claims to be a gold member of Microsoft’s System Builder Program.