Just figured this out. Hope my technique works for others
After downloading the Classmate_Update.bat file from the FIRST site, control systems area do the following...
1) Make sure you are hardwired to the internet, so when the activation form comes up, there are no network impediments.
2) Right-click on the bat file above and "Run as Administrator". This is a funny with Windows 7, and may have been the secret in my case.
3) Wait a few seconds for a confirmation message to appear.
4) Reboot the classmate.
5) You will be challenged for activation, so do it online over the internet now.
6) In my case the error message WAS repeated, but the notes in the lower right of the screen above the tray saying invalid copy disappeared. Yeah!
7) On the next reboot, there was no challenge, and it seems the classmate was validated once again. Even better!!