Did you call them or try to activate online? Call them at 1-888-571-2048 if you are in the US. You will have to punch the insallation ID into a machine recording, then if you are lucky you will be forwarded to an Indian woman named Usha who won't be afraid to hang up on you if you give her any crap. She will ask you a bunch of stupid questions, starting with "Is this the first time you are activating this product?" followed by "On how many machines is this copy of Windows currently installed on?" Answer "one" to the last question if you want to get anywhere. Then a few painful minutes later she should give you your activation code.
Bottom line though, you should be able to activate it, most times it just doesn't work over the internet.