Sorry if this is not the answer you're looking for -- but I did almost exactly what your doing, but using Macrium Reflect instead. Imaged off the current partitions to an external drive, stuck in the new, much larger, drive, restored from the latest backup. Rebooted.
Windows 7 came up deactivated (of course -- new hard drive), but selecting Activate Only worked and 5 minutes later, was up and running.
Perhaps others have used the builtin function, but since MR is free, there's no cost involved in trying that out.