I made it through steps one and two and all worked fine. The XP OS was gone, Windows 7 was assigned Drive C: and the system rebooted into the usual configuration.
Then I ran step 3, Recover the space. After putting in the PWBD and re-allocating the space as instructed, I rebooted the system. The BIOS screen popped up (this is a Dell Dimension 8400). I closed it and the system started Windows as usual.
After the Welcome screen, the message changed to "Preparing your desktop". Uh oh. That message displayed for a couple of minutes, then Windows 7 opened to a blank blue screen, no menu/task bar/icons, just the mouse cursor and a message in the lower right corner:
This copy of windows is not genuine
And it sat there doing nothing, allowing nothing to be done. I rebooted several times, ran recovery several times, no change.
Right now I'm restoring the system (hopefully) back to where it was before I started this.
I let this go the last time I tried because I didn't want to waste time trying again (work to do!). Is there any reason I should try again?
PS: My copy of Windows 7 is
genuine; I bought it as soon as it was released!