Vista to W7 upgrade error on new HDD

Here's the rundown:
Old HDD conked-off during a SMART event. I installed a new, larger HDD, a model which was recommended by both Acer and Western Digital.
As per Acer's instruction, I installed original, old OS first (Vista x64 home), upgraded with all SP's before upgrading to W7 x64 home with original, Acer supplied upgrade disk. The whole scenario worked fine on the old HDD, just to mention.
The W7 upgrade works all the way until about 99% before error "cannot upgrade current version of Windows on this computer's hardware". No error code or any other explanation, before roll-back sets in.

I have tried both upgrade and clean install, with same results. Western Digital ran a data lifeguard diagnostics on the HDD which came out clean. I have also upgraded the BIOS as suggested by Acer.
I did create a partition for back-up purposes, but the problem has been the same before or after partitioning.

Any advise on the cause and possible solution is very much appreciated.

Thanks!

Is your Acer-supplied Windows 7 upgrade disc an Acer specific disc or is it a standard MS Windows 7 Upgrade disc?

Actually it's the product key that is the difference here. If you can get possession of a MS Windows 7 disc in the Home Premium version, I recommend you just do a clean install of Home Premium and go from there. IT CAN be done, as I and many others have done it too. Paul Thurrott's SuperSite For Windows even has a tutorial on how to do a clean install from a Windows 7 Upgrade disc.

Besides, your install and subsequent system will run much better versus doing an upgrade over the top of Vista. Many users installing 7 over the top of Vista have experienced lots of problems.

Go here to download an ISO image of Home Premium X64 edition, then install the SP1 pack immediately after the install.

64-bit Windows 7 Home Premium x64 ISO
http://msft-dnl.digitalrivercontent..../X15-65733.iso

You can burn the ISO to good quality blank DVD disc using ImgBurn software which is free.

Thanks for your info!

It is an Acer supplied upgrade disk. I haven't got as far as entering the product key before the error occurred. The upgrade disk does give me the option of upgrading or clean installing, I have tried both ways.
The upgrade DID work smoothly on the old WD HDD. I will attempt to boot from an ISO image.

NO! Do not boot from an ISO image, burn the ISO image to a blank DVD.

Don't try any shortcuts. Install the normal way and that way you won't have any problems.

What brand and model of hard drive did you get for the replacement? Barring any hard drive QC issues, regardless of the drive, you should not have any problems installing Windows 7.

If it's a big capacity hard drive, then partition it during the install. I usually recommend a 64GB partition plus the 100MB one that 7 wants to install. When making that partition in the install windows that shows the hard drive and it's capacity, use the figure in MB of: 65,639 MB. That is the 64GB plus 100MB times 1.024 = 65,639 total MB.

Apologies, I have misphrased this: I have burned an ISO image to DVD and booted from DVD. Same problem.
The new HDD is a Western Digital as well, I had contacted them prior to making the purchase to ensure compliance. the new HDD is the one they had recommended to work on my laptop.
It is a 640GB, I have already partioned it, formatted the partition where I performed the install (as recommended by Acer after my first few attempts failed), and did both upgrade and clean install attempts. Still, bubpkis...no matter which way I go, it stops just before the end with the same error message: "cannot upgrade current version of vindows on this hardware"

Is there an existing Windows 7 install on the hard drive?

Have you changed any settings in the BIOS?

Have you had Acer tech support walk you through this while attempting the 7 install?

I have updated the BIOS, but only after recommendations by Acer.
The problem is the same before and after BIOS update.

Initially the HDD was clean, no previous install. I have installed W7 on top of Vista and/ or swiped the drive and attempted a clean install.

Although Acer support was initially reluctant to assist (warranty expired), they have been kind enough to explain the process, The upgrade was a breeze on the old HDD, plus I updated my desktop before as well without a hassle.

So you have a HD with this product key already installed? It sounds like you may even have two?

I had installed W7 with this product code on the old HD which crashed.
I did not have a chance to enter a product key on the new HD as the installation stopped before I had to enter a key.

How is this HD formatted? How many partitions, what type partition table?