Ok final post for the night. Both the 32-bit and 64-bit Windows 7 Home Premium Upgrade with a clean install DID NOT accept my upgrade product key when I rebuilt my RAID array first (aka removed all partition prior to booting off the windows7 DVDs). This tells us that to do a clean install you have to have some previous version of windows already installed on your PC somewhere (perhaps any drive or any partition). The fact that you can erase these partitions and install to the drive's bare unallocated space once in setup must mean that some flag is triggered during the initial loading of setup that detects the windows version somewhere. One key item to note: It seems like this works even with an unactivated copy of windows 7 installed on a partition.
Summary of what I tested tonight using my MS Store pre-ordered Windows 7 Home Premium Upgrade version downloaded today:
1.) Installing Windows 7 64-bit Upgrade as a Clean install on a completely blank hard drive prior to install -> Does not accept upgrade product key during setup and will not activate after installation completes
2.) Installing Windows 7 32-bit Upgrade as a Clean install, but having the 64-bit unactivated Windows 7 on the HD from #1 above prior to setup starting (Clean install meant I deleted all existing partitions during setup and installed to non-allocated space) -> WORKS AND DOES ACCEPT PRODUCT KEY DURING SETUP
3.) Installing Windows 7 64-bit Upgrade as a Clean install, but having the 32-bit unactivated Windows 7 on the HD from #2 above prior to setup starting (Clean install meant I deleted all existing partitions during setup and installed to non-allocated space) -> WORKS AND DOES ACCEPT PRODUCT KEY DURING SETUP
4.) Removing partitions from #3 above and Installing Windows 7 32-bit Upgrade as a Clean install on a completely blank hard drive prior to install -> Does not accept upgrade product key during setup and will not activate after installation completes
5.) Removed all partitions and verified #1 again -> DOES NOT WORK
A.) If you have a previous windows installation on a drive somewhere in your system and you want to do a clean install from your upgrade disc you should have no problem, as long as that partition is still intact during setup. You can even delete this partition during setup and create a blank hard drive to install to and do a completely clean 1 time installation. This will work with your Windows 7 Home Premium 32/64 Upgrade DVD and upgrade key.
B.) If you have a COMPLETELY BLANK HARD DRIVE prior to install (no previous partitions at all with windows on them), your Windows 7 Home Premium 32/64 Upgrade DVD and upgrade key WILL NOT BE ACCEPTED during setup, and also will not activate later once in windows after installation completes (ex: you leave the product key blank during setup so that setup can complete)
--> The workaround to situation B is to just run the Windows 7 clean installation a second time. The first time you just simply leave the product key empty so that setup can complete. Once in windows after the first install, don't bother trying to activate. Then just reinstall again booting from the upgrade DVD media again. I know this is completely lame and is essentially a 2x installation, but at least you can still do a true Clean Install (no need to try an in-place upgrade from Windows 7 to Windows 7 sillyness), and this time it will accept your upgrade key.
Hope that wasn't too confusing!! Feel free to ask questions if anything's not clear!
UPDATE: Just wanted to update that online activation went thru just fine a few min ago for me following scenario B above where I did the 2nd clean install with my upgrade key after the first install without the upgrade key, screenshot attached =)