Yep - it means that the guy who built it gave you a pirated/counterfeit/already-in-use copy of Windows which Microsoft just caught up with and deemed invalid. It wouldn't surprise me if this person is using one license key on all the systems built - it's illegal, and I've seen it done quite a few times elsewhere.
If you didn't receive a license with the computer, then send the seller a message requesting one, and file a complaint if that doesn't work. We can't really help you with recovering an operating system that you don't own in the first place.