I believe Mack is right... You will need to tie the password to a unique identifier - and the the USB could indeed have a unique disk ID that could be used.
As for how to incorporate this into your project - ( believe me when I say this...) Mack knows a universe worth of stuff more than I do...
All I could offer as another suggestion, is that you might try a remote activation option.
For example, when the student has purchased his USB let him plug it into his system, and log onto a website. the student will enter a code of some type ( that will I.D that particular USB by the password that came with it.)
When the student enters the code ( providing the code is the Genuine article ) the website will UP-DATE ( in otherwords un-lock ) the USB by remote and report that the unique " key" has been used - and belongs to "...... [ whoever]....and that remote activation number cannot be used again.
This method has some advantages...
1: the student entering the initial ID he got with is ORIGINAL USB will have a record of being used ( and is LOGGED ) - so ANY duplicates made by other students will be USELESS if they try to go to your website and ALSO remote activate because the number has already been used and ACTIVATED previously. ( checked by a database to be kept on your website )
2: Using this method would ensure that if there IS a problem, you can keep track of WHO the ORIGINAL OWNER is and so if there is a problem and a NEW key is required...providing they can varify their identity they simply send the USB BACK...and you can issue them a NEW one.
3: Single use remote activation ALSO has the advantage that no "code" is seen, thus nothing can be recorded by the student to pass on to his "friends".
4: If you make sure that every time the student "saves " his work, its saved to some external place ( other than the USB itself ) - then if they DO have to recieve a replacment USB at any time, they will NOT have lost their data, because the data would be read from this external source every time the program runs. - so a replacement USB would cause them no problems at all and no inconvenience because they would not have lost their "place" within the publication.
As for Coffee and a chat? - sure, just drop me a line and well arrange it.
Hope this helps mate - its the only other suggestion I could think of - but Mack's idea is pretty damned good. - just way over my head... lol! - but I have to admit, hes a regular Genius with Opus.
Cheers mate!
