First, assume every customer is guilty of something; eventualy, you'll be right and can use it against them.
Second, whenever possible, remind them Who's In Charge -- eventually, they'll get it through their thick heads and quit driving down your margins.
Third, embrace the use of punishment as a deterrent. Although Microsoft promises hugs and fun gifts for users caught with illegal software on their PCs, I suspect the lucky winners of the Larceny Lottery will have more in common, emotionally speaking, with a dog that just met the business end of a rolled-up newspaper.
I did a phone interview with Miguel de Icaza yesterday, and when I described the "verification" system, he seemed nonplussed -- it would work, as he noted, a lot like the current Windows Update system already works.
Yet the problem actually has very little to do with the technology itself; rather, it's a question of the context within which Microsoft applies its massive and, when it chooses to be, quite intimidating technology infrastructure.
In one situation, an ActiveX control is a benign little buddy, ready to load whatever you need it to load onto your PC. In another situation, the same ActiveX control is turning your underwear drawer upside down, poking through the contents with its nightstick and telling you -- again and again -- that this would be much easier if you just admitted where you hid The Stuff.
Do I exaggerate here? Of course I do. But I only get this way in order to emphasize a legitimate point: Technology is power, and power always takes on the color and characteristics of its surroundings.
Microsoft can't play the game both ways. It can either admit that it considers squashing software piracy its top priority, which also makes a higher priority than customer service for the time being; or it can pursue a more customer service-focused approach, even though its anti-piracy campaign will suffer as a result.
Acting as if there's no conflict between these two goals is simply spineless -- and whatever I think of Microsoft's products or its busines practices, I never thought I'd see Gates and Ballmer show up on the missing-backbone list.