Exact same problem heres the most useful thing iv seen about it. 4 hours and 38 minutes later..
http://social.answers.microsoft.com.../thread/aedb1245-f8f9-42ec-9a0c-1aa932363bbb/
Downloaded it twice wtf microsoft, I am really pissed off. There are some steps in that link that tell you how to get around it. But I am still just to mad at microsoft to do it right now. What the hell? Really?
xp 32 bit upgrading to premium 64 bit
another one
http://social.technet.microsoft.com...l/thread/62675a69-2a19-4695-8c8d-8a83be589708
2 different guides I copy pasted
Guide 1
I have the same problem with Digital River order. I have a different workaround though. Instead of creating a bootable ISO you can create a bootable flash drive then dump all the files from "expanded Setup" folder onto the flash drive and install the system from it. I did that and I was able to boot the installation of the OS. Assuming there are no corrupted files in the "expandedSetup" folder I should be able to install the OS without a problem.
Here is how you can create a bootable USB key from Windows Vista (I don't know if this works under XP):
1. Make sure you are running the system as Administrator
2. Open up the run command prompt and type in: diskpart and Press Enter
3. Type: list disk and Press Enter
4. Type: select disk # , where USB key's disk number is #. You should be able to recognize the USB key by the size after typing in list disk. Press Enter
5. Type: clean and Press Enter
6. Type: create partition primary and Press enter
7. Type: select partition 1, then Enter, mark the partition as active by typing: active then Press Enter
8. Type: format fs=fat32 and Press Enter
9. Type: assign and Press Enter
10. Type: exit
This should create you a bootable USB Key. Now copy all the files from "expanded Setup" folder and you should be good to go. Make sure to change your boot order in BIOS to start with the USB drive.
Hope this helps people.
Guide 2
Thank you, puppetworx, for the links. Even with the above mentioned error, I was able to create an ISO, burn it, and install it. I am posting this from within Win 7 Professional, fully activated. To shorten things for you all, here are the exact steps I followed and the circumstances surrounding my install:
1. From within XP 32-bit, I downloaded the 64-bit version of Win7 Professional upgrade.
2. Used the installer to extract the files, but received above mentioned error.
3. Checked the file size of the folder "extendedSetup" and noticed that it was 3.01 GB.
4. Moved extendedSetup folder to root (C:\)
5. Downloaded this file and placed it into C:\WINDOWS\System32:
http://www.sevenforums.com/attachme...124-make-bootable-iso-student-d-l-oscdimg.zip
6. Bought up command prompt and typed the following: oscdimg -bC:\expandedSetup\boot\etfsboot.com -h -u2 -m -lWIN_EN_DVD C:\expandedSetup\ C:\7.iso
7. Burned ISO with ImgBurn (freeware)
8. Booted, installed, and activated
There could very well be something wrong with my install, but everything looks to be in working order. I've been using the beta for a while now and it feels the same. Hopefully this little bit helps some of you out there.

I'll be up for another hour or so and will gladly help in any way possible.
Guide one did not work for me because I am having some admin issues, but guide 2 seems to be working ill be back and post if it works
Sigh I made the iso but now my dvd burner wont burn anything. Ill attempt to put the iso in my usb flash drive? Hmm that doesnt sound like it will work.