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If you try to upgrade from Windows Xp or Vista to Windows 7, while inserting your license key during the setup process, you might get the following error message: “The product key is not valid. Please retype the product key”. Here are the procedures to solve this Windows 7, annoying upgrade problem!

• Retype the license key carefully and make suer that the caps lock is off.
• You have skipped the product key validation and you have not entered the upgrade license key during the installation. If this is your case, you might even get the following error message. (This error message is triggered when user try to insert Windows 7 upgrade license key after Windows 7 is installed):

The following failure occurred 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.

• Keep in mind that to avoid  this upgrade problem you have to use the Windows 7 Upgrade DVD product key when on your computer there is already a valid Microsoft operating system such as XP or Vista.
• If the system has already been formatted prior to running the upgrade install you can follow one of these steps to upgrade the computer:1. Re-install the previous operating system and then run the install from your old operating system (XP or Vista).2. Re-install the old  system.  Start the computer with the Upgrade DVD and select the Custom option to perform additional tasks, such as formatting the hard drive or installing to another hard drive.3. Proceed with the current installation but do not enter any  product key. This will let you to complete the install of Windows 7 on the computer. However, you will not be able to activate the product.

  If the install is finalized without entering a product key you will be prompted to enter the product key when attempting to activate. If you type in your upgrade key at this point this message will occur:

  Code: 0xC004F061

• Description: The Software Licensing Service determined that this specified product key can only be used for upgrading, not for clean installations.If you receive this error message please visit the link below to contact product support:https://support.microsoft.com/oas/default.aspx?gprid=14019&st=1

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Note: If this article doesn’t help read this article. It contains a great hack which could solve your issue!