No, you don't have to be online at all times - it's only when you go to activate once a year. Two possibilities come to mind:
1. Activation didn't go through successfully the first time. Try to activate. If it lets you, that was probably the problem.
2. A hardware change caused the notebook computer to appear as a different computer to SmartMusic. Although it's supposed to be immune to this, it's possible that something like a wireless network card being swapped out or some other change caused the problem. Either way, if you can't activate the subscription again, give customer support a call tomorrow and they should be able to help you.
Windows XP, all updates
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