Are you booting from the DVD? To upgrade you have to start the installation
from within the OS you want to upgrade. While running XP insert the Vista
DVD and start the installation. I don't recommend you upgrade in any case. I
recommend a clean install. Vista is better than previous versions of Windows
at upgrading from an older OS but there are still cases where the upgrade
may cause problems. The problems are usually caused by already installed
applications not being Vista compatible. After an upgrade this can be very
hard to diagnose which app is the problem. If you do a clean install, then
reinstall the apps, the problem app will be apparent immediately after it is
installed. In some cases just installing the app in Vista will fix it
because of the virtual registry and file store whereas upgrading from XP to
Vista with the app already installed will cause problems. If you must
upgrade here is my standard spiel on how to prepare the computer for the
upgrade.

1) Backup your PC.
2) Back it up again.
3) Test your backups.

If you skip the above steps please don't whine that the upgrade trashed all
your files. Any process that involves this many changes to the file system
is fraught with danger. If you don't have a full backup of your pc before
starting the upgrade you are a fool.

4) Run the latest version of the Upgrade Advisor and note anything it flags.
5) Uninstall (not disable) all antivirus, antispyware, firewall, disk
utility, and system utility programs even if the upgrade advisor doesn't
mention them. You will need to install Vista compatible versions after the
upgrade is finished.
6) Uninstall (not disable) all programs that the upgrade advisor flags as
possible problems. You will need to install Vista compatible versions after
the upgrade is finished.
7) If possible remove all hardware that the upgrade advisor flags as
incompatible.
8) Make sure you have Vista compatible drivers and software for all your
hardware devices burned to CD. Don't just look for drivers that the upgrade
advisor mentioned. If possible have drivers ready for everything.
9) Physically unplug any external devices like portable hard drives,
printers, card readers, flash drives, cameras, etc..
10) Run a chkdsk on all the partitions on all hard drives still connected.
11) Defrag the system and boot partitions.
12) Start the Vista upgrade process.

You cannot select the Upgrade option when you try to install Windows Vista, and you receive the following message: "Upgrade has been
disabled"
http://support.microsoft.com/kb/926069/en-us

More help:
http://support.microsoft.com/search/default.aspx?mode=a&query=upgrade+disabled&c
atalog=LCID%3D1033&1033comm=1&spid=11732

A month back I bought a Dell Latitude D630 with XP Pro installed. After
seeing that Vista SP1 solved a bunch of problems with Vista I decided I
want to go with Vista on my laptop.

I bought the full version of Vista Business from the Windows
Marketplace. Microsoft says (unless I misunderstood) that there is a
valid upgrade path from XP Pro SP2 to Vista Business. I am starting the
install from the disk and from within Windows. The Upgrade Advisor says
I am ready to go. But...

When I enter my key and move forward upgrading is grayed out and is
unavailable. There is a message on the screen that says upgrade checking
has been disabled.

Did I just donate $300 to Microsoft?