Yep, if they have played in the CL pre-Jan for their old team then they can't play for the new side. Example is Arshavin last season (played for Zenit vs Juve, Real and BATE pre Christmas) couldnt play for Arsenal vs Villareal or Man Utd.
On the other hand Real Madrid could register Lassana Diara as he had only played UEFA Cup football for Portsmouth pre-Christmas. It's interesting to note that Huntelaar had also played only UEFA Cup football that season for Ajax before his January signing for Real - but they could only register one new CL player and picked Diarra.
So Man Utd could sign one new player for the CL who could either be a player who has not played European football this season (e.g. Palacios) or one who has only played UEFA Cup football (e.g. Cahill)...
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