I did some more digging and was able to confirm the bad reg#. To work around this issue I did the following:

open galgsbl.DLL in a hex editor
search for 'reg#'
change the registration number to something other than 39574913
regen key for the new registration number

I too am having the exact same problem. I've tried on one computer running both WinXP and Win2k and then on a 2nd computer running Win7. They all behave the same way. Same registration number and authorization code. WG upgrades from a 6 user to 256 user version correctly, but stays in DEMO mode ...