Weird that no one is answering this common question. I don;t know if this is the definitive answer but what I've found under a Microsoft Forum is that running the same Win7 instance from BootCamp and from Parallels is considered two separate machines (by MS) and hence needs two licenses. The problem is that it is the same instance of Win7 so you cannot enter in two licenses... what a catch 22. MS is claiming that Virtual machines are separate machines requiring separate licenses.
It worked fine under Parallels desktop 6 but it could also be one of the Windows updates of it's activation checking engine... worked fine in Parallels Desktop Mac v6 but doesn't work in v7. Each time I try to fix it and go back to using Win7 the other way, it says it's not genuine and needs re-activation .... until you run out of chances and you have to call MS to get a new activation key.
