Hello CShack_,
Thank you for posting in Microsoft Community forum.
Yes, dual booting is still allowed on a single PC with a digital license. The issue you are experiencing with activation may be due to the fact that the hardware IDs for both installations are not identical. Windows activation is tied to the hardware configuration of the device, and any changes to the hardware can trigger the need for reactivation.
In your case, the BIOS upgrade may have changed the hardware ID for the gaming installation, causing it to lose activation. You may need to contact Microsoft support to resolve the activation issue for the gaming installation. They can help you reactivate Windows using your digital license.
Volume Licensing Support Info. | Microsoft Learn
I hope the information above is helpful.
If you have any question or concern, please feel free to let us know.
Best Regards,
Haijian Shan