Windows Activation

Maybe I am a bit lost here, but over the weekend, I Purchased the new iMAC and I also purchased the Parallels to Mac Desktop software that also contained the transfer cable. I conneced everything up and it all went smoothly. I had a Dell that was running Windows XP Professional with a SP > 2.0. After the transfer, there was one last part that stated I needed to do manually. I opend up Parallels Desktop and it is asking for the Microsoft Windows activation key. I entered the key from the tag off the side of the Dell. Microsoft claimed that the version of the software was not valid. I just got off the phone with Dell, and they told me that I am only allowed to run one version of Windows XP on 1 PC. I then went to the Microsoft website and looked at assistance for activation and basically am getting the same feeling.

Am I missing something here? I don't think that I have activated Parallels yet. Does that have something to do with this? Did anyone else experience this issue and how did you get around the activation issue? If I need to purchase another copy of Windows XP Professional, how to find the old software? Deal with Mircosoft? Maybe it is too late and I have been trying to get this to work for too long. Heading to bed for now.