Okay, This works. I just purchased reason and rack extensions and was not going to spend days or weeks troubleshooting. Follow the instructions below (I used google chrome since internet explorer wasn't working). This was posted in another forum, credit and thanks to the original poster. I'm spreading the love because their is a lot of misery surrounding this.
1 Move factory sound banks out of Propellerhead folder
2 uninstall all previous Reason versions and Authoriser versions
3 download 6.5
4 install 6.5 and authoriser 2.0 will be automatically installed
5 Write license for 6.5 to IK
6 Run Reason 6.5 then close it
6 Clear cookies
7 open codemeter control panel download firmware 1.20 then leave open minimised on desktop
8 unplug and replug in IK leave open (looks like a blank USB window) minimised on desktop
9 start menu launch authoriser as admin (manually)
10 go to PH website
11 go to Re shop download Re's
12 go to account, manage licenses
13 write licenses.