Blue background and hanging when try to Activate Windows Server

I'm trying to upgrade from Windows Server 2003 R2 SP2 Standard Evaluation
Version to the MSDN channel version. I ran setup from the MSDN disk and then
selected to upgrade. This upgrade path is supported according to
http://support.microsoft.com/kb/912309

However, after reboot and logon, it forces me to activate. Upon selecting
to activate, it hangs with the standard blue background (not BSOD).

Thanks for any input you may have!