I have Windows 7 running on my laptop.
I want to create a VM on my laptop that will also be running windows 7. Can I use the same key I used for my laptop as I used for the vm?
Or is that going to cause problems?
No you cannot use the same key. Using the same key will cause problems as the activation will probably notice this as two separate machines,
Yes, you need another key.
I disagree with @Mark's answer because of the phrase "Instead of using the software directly" in the licensing text above. That means "if you don't want to install this software directly on the machine, you may choose to run it in a VM on the machine instead of, but not in addition to, installing it on the machine".
So you'll need another key for the virtualized instance of Windows 7. Or you can change the host OS to something free like CentOS and use your Windows 7 key for the guest instance.