Microsoft says i have an illegal copy of Windows 7...

CINTAM said:

That the original seller sold me a genuine copy that was not intended for resale and for home use. They said its suposed to be used on Business PC's only even though its HOME premium...

A genuine copy not for resale would have had me suspicious. Besides, at work we run XP home because it's all we really need, so the name doesn't mean that's it's only use =]

DeaconFrost said:

That alone tells me you were duped and your copy is counterfeit. Good fakes from China look real. I'd dispute it and get a legit version from another source.

To be honest, this is probably your best option.

I've just recieved a refund, but i still have the OS. No one seems to want it back.

I've been looking for a bios update but can't seem to find one...

Now that you have a refund, you can get a legit copy from somewhere like Newegg, MicroCenter, or a trusted source if you are within another country.

I've just brought a new copy of Windows 7 again. I can install the 32-bit OS, but the 64-bit software hangs on the splash page every time...

You can't install x64 software on an x86 OS. If you have x64 software, your options are to run the x64 OS, or get the x86 alternative to the software.

You'll need to boot the installer to proceed with the other bit-rate version. Clean Install Windows 7