Depends on your definition of legal.
Microsoft would say a definite No.
The real-world legal situation is that copyright laws differ depending on
the country/state you're in, so whether Microsoft's (hypercomplex) T&C are in
fact enforcible is a moot point, and one which has seldom been tested in
court.
HST I think there is a scheme for obtaining a replacement CD at moderate
cost. If so that might be your best route.
http://support.microsoft.com/kb/326246