Can I do these things?

My friend wants to borrow my copy of the Microsoft office and student 2007 disk. It says on the package however, that "you may not lend or make illegal copies of this software".What if the software in uninstalled from my computer can I still let him install it? Or is it OK if we both have it at the same time? And finally, Is it OK if I sell this disk online or will I be penalized for it even if it isn't installed. I know it's quite a lot of questions but please try to answer it to your best :) thank you.