It's not actually illegal to exchange PC games (there was a debate in FG41 concerning Electronic Boutique's policy of not dealing in secondhand PC games, whereas Games Exchange do), but it is quite risky. As you actually buy a license to run a game on only one machine when you purchase a game, if you're going to take part in a game exchange then the game has to be completely uninstalled from your machine. It gets complicated when games like Quake and Aliens vs Predator come along though, as they don't require the CD to run.
Lawrence Gilbey
FG:
Thanks for clearing that up for everyone, Lawrence.