Make sure that you are not copying and pasting your password.
After resetting the password at http://account.live.com, log in with the LiveID at http://billing.microsoft.com to verify that you have indeed activated a subscription. If it shows active, and you are still unable to log in with that LiveID in OneCare to activate, please contact support after confirming that you have no other security software (firewall, antivirus, antispyware) installed and running on your computer that is interfering with the connection to the OneCare servers.
How to reach support (FAQ) - http://forums.microsoft.com/WindowsOneCare/ShowPost.aspx?PostID=2421771&SiteID=2
-steve