Absolutely correct. This is one of the reasons why I use an MS account on physical devices.

I use local accounts on virtual machines to avoid cluttering up my MS account.

I do not understand the question.

If old pc was activated, and new one is not you can use activation trouble shooter to transfer digital licence to new pc (provided using same MS login account on...

OP tried that but it can be hit or miss. If you have a retail key, just enter it as I said.

Just enter the W7 Pro retail key at "Change Product Key" link in activation menu. I did this recently.

The same applies to any edition (Home, Pro) illegally activated with a volume licence key. As you say it is a common scam to put illegal software on PC that fools Windows into thinking the volume...

In simple terms, VL enterprise keys are illegally sold to general public, and unless pc can contact the appropriate server, it will become deactivated.