I'm confused about the OEM issues
What about the situation where the software can't be activated (since
hardware changes would be to great), and its tied to a machine? ... is
it then a "dead" license
Not sure what you mean here. You can change the hardware, but the question
comes up, at what point will it be considered a "new computer". If
activation doesn't go through on the internet then you have to do phone
activation, and then it's up to the person who handles that call. There is
nothing specific that says what constitutes a new computer. Some maintain
that upgrading the motherboard does. Changing a motherboard that died is
fine.
what if the machine is scraped, what happens to the license
The license dies with it.