Paul Thurrott has posted more info on Windows ITPro about the nagging question regarding being able to install Vista as an upgrade. He also inlcudes a “workaround” for the issue.

Here’s a snippet from his post:

With a support note quietly posted to its Web site, Microsoft confirmed what enthusiasts have long feared: Users who purchase Upgrade versions of Windows Vista will not be able to perform clean installs of the operating system. Instead, they will need to first install their previous OS and then upgrade in-place to Vista.

"This problem occurs because Windows Vista [Setup] does not check upgrade compliance," a support note on Microsoft's Web site reads. "Therefore, you cannot use an upgrade key to perform a clean installation of Windows Vista."

And here is the suggested workaround:

1. Boot with the Windows Vista Upgrade DVD.

2. Click "Install Now."

3. Do not enter a Product Key When prompted.

4. When prompted, select the Vista product edition that you do have.

6. Install Vista normally.

7. Once the install is complete, restart the DVD-based Setup from within Windows Vista. Perform an in-place upgrade.

8. Enter your Product Key when prompted.