If you entered the key from inside the retail box of OneCare and it told you that the key was already used, that means you cannot use it to activate and you will need to exchange that copy of OneCare since someone else already used the retail key - it can only be used once.
If you are getting an error about the key being invalid, you are mistaking at least one character or you have a misprinted key. The latter is very rare, though it can happen.
I hate the font that they use for the key - some characters are miserable to discern. J and I look all too much alike, as do O and 0.
I recommend that you use a magnifying glass to check the characters closely - I find that I need to do this. If you are still encountering a problem with activation, you have about 2 weeks to get activated, so I'd go ahead and open an email request to support, explaining the problem. See the FAQ and use the Trial user option to start the email request. If you can provide a digital image - scan or photo - of the key to the tech that responds, they can validate the key for you.
How to reach support (FAQ) - http://social.microsoft.com/Forums/en-US/onecareinstallandactivate/thread/30400b52-7f26-4ba0-bc18-17e305329d90
-steve
Microsoft MVP Windows Live / Windows Live OneCare & Live Mesh Forum Moderator