This is where this "upgrade" gets confusing. As I performed a clean install with my upgrade disc and activated it successfully.
I already had Vista Ultimate on my PC:-
I rebooted with my iso burnt disc in. got to the option of upgrade or clean. Selected Clean.
Formatted the drive that Vista was on.
Entered my key when asked.
Activated when asked
All Tickity Boo
Done a backup
i just read your post again there.. i went and bought a new hard drive and installed the upgrade on there so i didnt have anything before and that was how i got that error message id got..i only just thought about enterin the serial i got yesterday and when i got that message i was like crap..but id remembered seein a tut on how to get around it..my old hard drive i kept vista 64 bit on just incase i did have to do it the way u done it