presumably when replicating your Windows VM's to a DR site (replicated SAN with Clustered ESX host) you need extra licences for Windows OS, etc
or Because it is only powered on in DR scenario does this effect the licensing?
My guess would be that as long as there is only one instance of the VM running, it doesn't matter where the VM is running. (Primary or DR site). You wouldn't think that you need a second license if you picked the physical machine from your primary site, and then moved it to your DR site, so this (to me) is the same thing.
If you have Software Assurance on your Microsoft licenses, you are entitled to have a "cold" (i.e. powered down) copy of your production systems for use in DR situations. If you do not, I suspect you need additional licenses. See http://www.microsoft.com/licensing/sa/benefits/cold_backup.mspx and http://www.vmware.com/pdf/ms_licensing_faqs.pdf
Last I checked, VMware still requires you to license your DR environment separately if you intend to run it concurrently with your production environment, such as for DR testing. I don't see anything wrong with building both sites and ensuring you have sufficient licensing to set to unlicensed (at production) and licensed (at the DR site) just the hosts you need during a test, and reverse the process afterwards. Then, during a full DR, you can connect all your hosts at the DR site. See this thread: http://communities.vmware.com/thread/101968
As with any licensing scheme, get authoritative information directly from the vendor, ideally your account manager, and get it on paper. Software companies can be extremely fickle, especially if a relationship turns sour for whatever reason. Also, web pages that previously stated bits of information have a habit of "disappearing". So make sure that whatever you have is in black and white and on the vendor's letterhead.
You're correct, it might well have changed. However, the last major revision to Windows licensing I remember was around the Server 2003 R2 release, which was in the Q3/Q4 2006 timeframe, so Sept. 2006 isn't that long ago in that context. It's probably a good idea to check with Microsoft themselves, though.
As an example, take this document clarifying the use of MS licenses in a virtual environment: http://download.microsoft.com/download/6/8/9/68964284-864d-4a6d-aed9-f2c1f8f23e14/virtualization_whi...
It contains the following paragraph:
To help you take advantage of the deployment flexibility that VM technology offers,
all products in the Microsoft Servers licensing models are licensed by running instance.
The use rights no longer specify the number of times the software may be installed and
used on a server. Rather, each license gives you the right to run a certain number of
instances of the software on a particular server at a time.
This, according to the document, applies to volume license editions of the products. However, depending on the mood of the Microsoft salesperson the day you sign the contract, he can either invoke the Software Assurance card (which I mentioned in an earlier post), or not, since the document makes no mention of SA but there are other licensing rules that do.
This is why I feel it's important to bed things down on paper with the vendor.