Error Code: 0x8007232C DNS request not supported by name server

This error occurs when you try to activate Windows Vista or Windows 7 and you are activating a copy of Windows outside of a KMS server (usually outside of the company). KMS server is located inside of a domain environment and when you attempt to validade the copy of Windows you get this error. Microsoft has a tool that verifies if that is the case:

Genuine Diagnostics tool – link http://go.microsoft.com/fwlink/?linkid=52012

once you download and run the tool, it will generate a report that will tell  if the copy of Windows you are using is activated only via a  KMS server.

The report is in a GUI format and has 7 tabs; the Windos tab will have a line for product key; if it reads  Product Id Type 1. KMS client, that is your answer. you cant activate outside of your company AD domain.

useful link: MS Genuine Advantage Forum