Hello
The problem here is not about retail vs. OEM, but because this license was originally a Windows 7 license.
You were able to upgrade all the way to Windows 11 back then, and I believe that's true, but that has changed. Microsoft has closed that upgrade path and no longer allows it. Upgrading to Win11 is only meant for original Windows 10 licenses. Many users who upgraded from Windows 7 or 8 to 11 have run into this same issue and have been told by support that they must get a new license.
The change of policy was announced here and started to roll out Sept 2023 https://devicepartner.microsoft.com/en-us/communications/comm-windows-ends-installation-path-for-free-windows-7-8-upgrade
A few references here, where others shared what support said when they reached out:
Sorry.. I know this may not be the info you hope to hear, but I'm just here to inform.