Did you get the OEM key with the DVD? The installation media has to be the correct one for the key that you bought. I also used a downlaoded ISO image to reinstall Windows 7 on a system that came with an OEM key on a sticker and it worked fine.
Yes, as my post read, the DVD came in a sealed package from
Tiger Direct. It would not install from the DVD instead
it produced the all to common error
“Windows encountered a problem communicating with a device connected to your computer. This error can be caused by unplugging a removable storage device such as an external USB drive while the device is in use.
Make sure any removable storage is properly connected and then restart your computer.”
I/O Error 0xc00000e9
I installed with the ISO image and it refused the new key but for some
odd reason accepted the key I bought in 2009. How that happened is a mystery to me.
This is the source http://www.w7forums.com/official-windows-7-sp1-iso-image-downloads-t12325.html
The fact is, the install should have happened with the DVD using the new key.