The Windows 10 upgrade is presently free, or when the promotion is over, heavily discounted for users of a previous version of the operating system. For this reason, qualification for an upgrade is contingent on the existence of a valid license that's being replaced.
When upgrading the retail Windows 7 install on your originally blank PC, the Windows 10 license became tied to that Windows 7 license.
You can install Windows 7 virtualized on your other PC and use the product key from that retail purchase -- so long as you uninstall Windows 10 from the original PC -- since that Windows 10 install is tied to that Windows 7 retail license by way of upgrade. You also can't install that same license of Windows 7 on the original PC either.
In other words, upgrading Windows 7 to Windows 10 does not free that Windows 7 license for reuse. That Windows 7 license effectively does not exist so long as the Windows 10 that upgraded it is in use.