This is clearly some kink of bug if it doesn't accept any valid license key. I tried to enter that key into the activate screen and it refused to accept that newly purchased product key so I got a refund.
Some bug in one of the updates caused all new builds to keep nagging me to Activate windows, so I gave in and contacted Microsoft to purchase another license key. While I was using each update, I got nagging reminders to activate Windows even though the software was activated. Each of the Windows 11 updates worked for around 2 hours just like the previous Windows 10 for ARM did. My problems only started when the automatic updates were for Windows 11 for ARM. That version never asked me to activate the install twice regardless of how many times the automatic updates for Windows 10 for ARM where installed.
When I purchased my current MacBook which is ARM based, I installed the ARM version of Windows 10 which I got from Microsoft Insiders onto the VM. My license key came from that install of Windows 10 which is many years old. Hi I had my older MacBook I was running the Intel version of Windows 10 on a Parallels Desktop VM.