^ Is this the same computer you ran the Upgrade Assistant from? Or did you order at Windows Upgrade Offer - Landing Page ?
Your scenario is perfectly valid when the Upgrade Assistant authorised against XP,Vista or W7 ON ANOTHER COMPUTER and you brought the isntall DVD to your new computer...
^ shame you don't have a 2nd computer. The Windows7 Retail copy is transferrable (obviosuly) so going back to the OEM licence sounds like a good idea. How big is your disk? Or go for a dual-boot.
Did you format the partition as part of the Custom option? That's probably different from formatting before starting the install. Vitally different. Oh and did the upgrade activate ok?
Just installed the upgrade over Win8Pro Release Preview (Custom upgrade). Activated automatically using key provided by the Upgrade Assistant. Must say I'm a bit surprised. (Ok I know this wasn't a blank disk but I didn't think the Preview Release would be upgradeable).
Depends whether you can intall Win8PRO Upgrade to a new disk. Somebody should know about now?
Otherwise I'd image old disk -> new disk (gives you a bu!) then upgrade that BUT during the upgrade select CUSTOM option to give you your clean install.
I don't know about System Builder but I'd be cautious of removing your Windows 7 partition BEFORE running Setup from your Win8Pro Ugrade (boot) disk. Unless somebody knows otherwise, I'd suggest you choose the full format option (that's the "custom" option) during the upgrade process.
I guess...
What error message does the Win8Pro Upgrade Setup (from bootable USB/DVD) give if the destination partition is blank? I guess nobody can answer this until Friday?