It is most likely your activation files have been corrupted, causing Windows to think (or not know) the current state of acivation.  

At a command prompt (Start, type in CMD), type:

chkdsk /r

Hit Y to schedule it, then reboot and let it run.  It may take up to an hour or more.

After Windows boots, at a command prompt again, type:

sfc /scannow

You may need to insert your Windows disk for this step.

Once completed, you can try online activation again.  If it fails, activate by phone.

Hello,

To identify the originality of your software, you need the following items: sales receipt, the media (DVD) or the original software partition recovery software on the HD and also the label where the key is stamped.

It is advisable to check if your Windows is already activated, I suggest you do the activation online, fast and simple and is safe, here's the way to turn the internet.

Click "Start" then Right click "Computer", then "Properties" Basic will display information about your computer down at the bottom of the window, as your product is not activated, will report that missing so many days to Activate, click to activate Windows now, you see the option to activate over the Internet, select this option and follow the procedures that will appear on the screen.

If you stay with the message on the screen, go to: www.microsoft.com/genuine and run the "validate Windows", after completion of each step restart the computer, so you can identify that the message has is no longer displayed.

Hope this helps!

To identify the originality of your software, you need the following items: sales receipt, the media (DVD) or the original software partition recovery software on the HD and also the label where the key is stamped.

I have a collection of PCs, and this problem occurs once in a while. The resolution is to reactivate via the phone line; no physical evidence is needed and it works on the honor system (although Microsoft's activation system has ways of keeping the honest honest).

I faced this error like this:
Error 1316: "A network error occurred while attempting to read from the file: :\Install.msi"
But i fixed it by performing the following tasks:

    1. Use Windows Installer Clean Up
    2. Use a Registry Fixing Utility
    3. Change Windows Installer Registry Information
    4. Check the Security Details of the Concerning File

you can also get some help from this article to fix  error 1316 windows 7