Thanks for the replies
Hopalong X and
Brink it validates OK. It was the Microsoft pre-release order offer of full retail for £45 (bargain) and came from Tesco, the biggest UK supermarket so I expected it to be a valid copy.
As far as Windows activation is concerned, I followed the SevenForums Clean Install Guide (in the link below) and entered the key in step 13 and definitely left the
Automatically activate Windows when I'm online box
checked, so presumed Activation was all covered as I was connected to the internet at the time.
Clean Install Windows 7
I then installed
drivers and did updates, then did the System Image immediately after that. However the
Activate Windows 7 Online guide says this is done 3 days later so I presume was not done before the System Image was taken!
Everything has been fine since the original install in early Spring, used the System Image Restore approx. 3 times (it worked perfect) and all updates fine including those monthly ones that check the system out.
Everything is fine now, having used the install disk, it's just when I tried to restore the Image two days ago that the problem occurred.
I am sure I have used the Image well after the 30 day Activation grace period before without problem, but since the
Automatically activate Windows when I'm online was probably not carried out before the System Image was taken that may be the problem?
Perhaps I should, in future, leave the
Automatically activate Windows when I'm online box unchecked (as per guide) then used
Activate Windows before I do the Image.
Would be grateful for any suggestions.

The problem now is that I am reluctant to use Images just in case it happens again and I have no choice but to re-install from scratch with the Disk.
Many thanks for any replies.