Is there a way to activate Windows 7 when it's saying my license code is already in use?

Windows requires you to activate your copy by providing a valid product key within 30 days ^[1]. Aside from volume licensing, the product key is typically only valid on a single computer.

As it seems the key you received is already registered by some other party, I'd suggest taking your issue back to the aforementioned "licensed source" and getting a working product key.

You should also make sure that the security features of the packaging are ok. I'm not aware of other parties selling plain product keys online, except for Microsoft, and even then you'd get a Certificates of Authenticity (CoA) with your product key card.

If it seems that the key you received is a counterfeit you should report the seller to Microsoft.

You don't need to buy the Acer technical support at all. The cost and P&P of the factory recovery disks is all you need. Once you receive the disks the key will already be activated as these are the recovery disks you should have made the moment you received the computer.

I've done this numerous times for customers who neglect to make their own set of recovery media.

All you need is the device serial number, model, payment and an address. The disks can take a couple of weeks to deliver, however.

To be brutally honest, there is NO excuse people should not make their own recovery disks.

The Windows you purchased from that "licensed source" isn't legitimate and is most likely counterfeit and sells the same (already used key) again and again, so you got scammed.

Now, you shouldn't need to buy a Windows as your computer already has a license sticker on it with a product key. You can just download a clean ISO corresponding to that license, either on MSDN (if you have a subscription), on forum posts like these which list direct (legal) download links to a Microsoft distributor or on some shady pirate sites (make sure to check the hash against the official hashes published on MSDN to make sure you didn't get a compromised image).

Once you have that ISO you can reinstall it and enter the product key from the license sticker and it should be good; it won't activate right away and ask you to activate by phone but phone activation will work just fine.