The issue you're describing is very much what happens when there is a Pre-Activated version of Windows 7 installed on a machine which has been updated using
KB971033 or possible even the new SP1 release.
With a Pre-Activated version of Windows 7 there have been changes to the activation files to prevent Windows from requiring activation and the above
KB restores those files to how they should be. There are pirate versions available which have had this technology tampered with. I'd suggest following
Brink's excellent advice in making sure that your copy of Windows 7 is genuine.

Note
Please not we do not promote piracy here on sevenforums