Windows 7: Another Win7 boot fix saga

I've read the threads here on fixing Windows 7 boot. Here's my story. I installed Windows 7 as a dual boot with Windows XP. 2 partitions on one drive. I decided after a bit that I didn't really need XP anymore and Windows 7 insisted on imaging both partitions on hard drive since the boot info was on the XP partition. So thought I would just move the Windows 7 partition to a single partition drive, fix the boot loader and have my system just booting Windows 7 off the single drive and forget XP. So I imaged the Windows 7 Partition, and transferred it to another drive. Then I booted off the dvd, and fixed the boot record and wonder of wonders, my system booted to windows 7. It got to the desktop and showed a message "preparing your desktop" ... that was strange. Then it gives me a blank light blue background with a small note down in the right hand corner... "this is an illegal copy of windows." Nothing I can do from there. No way to validate or activate at all. I can get to the old task manager and start explorer from the run cmd but there is no access to anything else on the system.

I have no idea why this happened or what to do. I'm wondering If not activating this install before I moved it caused this.

I know I can just start over but it I'm determined to figure our why this didn't work. It seemed like such a good plan. Anyone got any ideas?

thanks