While installing or upgrading to Windows 8.1 from your local drive, “Something Happened; Setup has failed to validate the product key” error message may halt your installation. Here’s an easy solution to the problem.
This type of problem mostly happens if you are installing Windows 8.1 from your hard drive which is extracted from an ISO file that is downloaded or installing from USB thumb drive without boot. Installing Windows 8.1 from local drive by clicking on setup.exe (without boot) should not make any problem to 8.1 unless you done any wrong.
How to Fix Setup has failed to validate the Product key Problem
Step 1: Download the modified EI.CFG file (1KB) from http://goo.gl/8z8jJR. Both pro and enterprise edition files are included.
Step 2: Now locate the folder “sources” on USB-stick or the folder where you extracted the ISO image (windows ISO extracted files and folders should look like following).
Step 3: Paste the newly downloaded ei.cfg file in “sources” folder. Replace the old file (you may take a backup of the old file).
Step 4: Done! Now you can install and upgrade to Windows 8.1 by clicking on that blue setup.exe without facing the product key validation error.
Tell us if it worked.