Hi Peter,
I am not with Laminar Research; just a flight simmer.
Which program is asking for the activation code?
If it is the 3rd party software purchased from X-Plane.org then you need to make contact with them or raise your problem on their forum. Although that site is a dedicated X-Plane user site it has no connection with Laminar Research (X-Plane.com)
If your problem is associated with X-Plane then you need to ensure that DVD disc 1 is inserted in the DVD drive at all times when running X-Plane. If the disc is in your drive when updating it should be detected during the process.
Unfortunately, unlike XP10 there is no substitute USB dongle for XP11 as there was/is with XP10 If the disc is not inserted my memory tells me that when you are asked for the activation key there is an option whereby you tick the box advising you have a disc version and x-plane should run. If you don't then the program will automatically default to the demo version having been there and done that.
Hope this helps. Good luck
Glenn