Is the same product key valid for all windows 7 retail products? i.e. can i use my friend's product key to activate mine? if not how can i activate my windows vista ultimate?

Hello,
Each product key is unique, in essence when you buy a copy of Windows software you're actually paying for that serial number.
So while you can use your friends' disc to install a copy of Windows, you cannot use the key as it's tied to his copy and his computer alone. You'll have to purchase a separate copy for yourself or you can buy a "group" version which will usually allow for 4 activations of the product.
Hope this helps!