The problem appears to arise mostly when users attempt to perform a so-called clean installation of the software onto a hard drive that’s been wiped clear of existing data. The bug doesn’t affect Vista users, who can perform an in place upgrade to Windows 7 without impacting the contents of their hard drives. Instead, it afflicts Windows XP users, who must perform a clean installation in order to jump to Windows 7.
The problem: a Microsoft security feature in some cases won’t allow installation of an upgrade version of Windows 7 onto a clean hard drive, because such versions are meant to be used only on machines with existing copies of Windows installed.
XP users, though fully entitled to use the less expensive upgrade-ware, are as a result seeing an error message when they enter their Windows registration number that in part reads, “The Software Licensing Service determined that this specified product key can only be used for upgrading, not for clean installations.”
Fortunately, tech support staffers at various organizations have found an unofficial workaround that appears to neatly solve the problem.
XP users who are performing a clean upgrade to Windows 7 are advised not to enter their product key when prompted during installation. Rather, they should move on to the next step and only enter the key once full installation is complete.
The method “works around this issue to activate Windows 7,” notes a support bulletin published by the IT department at the University of Wisconsin-Madison, where numerous students were apparently having trouble with the issue.