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I had this same problem. Try it again without any key - just leave it blank. Worked for me.
I am also a IT guy and have installed 100s of OSs.. Purchased a upgrade version of the Pro flavor Win 7 for myself. The bloody key is invalid...
Enter product key screen" the key that i am entering is INVALID?????
Called Microsoft and they tell me they cant help me tonight... the system is down !!!
Hello !!! I just spent $200 +++ and the key registers INVALID.... wasted my friday night,,,,,,,
If you are trying to clean install to formatted HDD then this is happening to a certain per cent of those trying clean install, and they report that doing the Vista "upgrade over itself" trick is getting it to take the key and activate.
Just install without key the first time and then from the desktop run an Upgrade (repair) install over your installation a second time and hopefully it will take the key and activate.