When installing and upgrading to Windows 7 from previous version of operating system such as Windows XP and Windows Vista with an upgrade license, media (either Windows 7 ISO image or DVD disc) and product key, the following error message may be displayed when entering the serial key during setup:

The product key is not valid. Please retype the product key.

Windows 7 Product Key Is Not Valid

The main reason for the above error to occur if mistyping of the product key, or the product key doesn’t match the version of Windows 7 that’s installed on the computer. If indeed the product key is correct and valid for the edition installed, then the error can also happens and stops installation from continue due to Windows 7 upgrade license requirement, when the following conditions are true:

  • An Upgrade version of Windows 7 is used during the install.
  • The computer has been formatted prior to running the install.
  • The install was started by starting the computer with the Windows 7 Upgrade DVD.

The first workaround to solve the problem above is NOT to enter any product key during installation,which automatically install Windows 7 as evaluation or trial version lasts for 30 days. However, if the user skips and bypass the product key validation by not entering the product key so that Windows 7 installation can continue and finalized, Windows 7 will prompt user to input a product key to activate the system when system is booted up. The following error may occur when user enter a Windows 7 upgrade version product key after Windows 7 is installed:

The following failure eccored while trying to use the product key:

Code: 0xC004F061

Description: The Software Licensing Service determined that this specified product key can only be used for upgrading, not for clean installations.

Windows 7 Upgrade License Activation Fail

Officially, Windows 7 Upgrade DVD product key can only be used when the previous qualifying Windows operating system of Windows Vista or Windows XP is currently installed on the hard drive, regardless of activation status. It means that end-user will have to be either running the Windows 7 upgrade from within the operating system or by restarting the computer, booting with the Upgrade DVD and selecting the Custom Install option with existing operating system intact.

For user who has already formatted the hard disk drive and wiped off the existing operating system prior to running the upgrade install of Windows 7, Microsoft recommends one of the following steps to upgrade the computer:

  1. Re-install the previous operating system and then run the install from within the old operating system.
  2. Re-install the previous operating system and then start the computer with the Upgrade DVD and select the Custom (advanced) -> Drive options (advanced) option to perform additional tasks, such as formatting the hard drive or installing to another hard drive.
  3. Proceed with the current installation without entering a product key. This will allow you to finalize the install of Windows 7 on the computer; however, user will not be able to activate the product without contacting Microsoft support.

However, all of the above methods is not a time-saving and easiest way to perform upgrade of Windows 7 though. There is easy hack to perform clean install of Windows 7 upgrade version, which details how to activate Windows after continuing to upgrade Windows 7 without entering a product key as step 3 above.