Activation Question

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I have Office 2007 home and student and I installed it over my old version of Office 2003 a few years ago. It works fine, and after a while they mentioned something about needing to activate office(???), but I didn't do it because I couldn't find the cd-key at the time and the software was still working. Although, I've read somewhere that after a certain amount of uses it will give you basic features until you activate it fully. The problem now is that I need to reinstall Windows and I found the cd-key, but can't located the CD with the software on it. I found a site to download the software, but they are asking for the cd key before they'll let me download. So my question is, does the software become activated when downloading from microsoft or do you have to do it after a period of time(Or I guess there's some kind of activation feature you can access after installation). I honestly thought it was activated from the time I installed it, but apparently not.

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I want to be sure to do it right this time(lol) and I am just curious about which way it goes. Curious to know what I've been missing all this time!