UPDATE....
It has worked me finally... Thanks to jlouis32's post. I did not go to all that extent as I already had a partition of 12GB reserved (OEMRecovery) this was when I first bought the PC with Vista (upgraded to Win 7, Win 8 and finally Win 8.1 respectively)
This is what I did and it worked
- Purchased Paragon Disk Manager
- Renamed OEMRecovery Partition to "System Reserved" (without "")
- Formated the partition to NTFS file system from "FAT32"
- Went to Windows Store and clicked upgrade......... and finally after about an hour or so..... all done...
For a safer side, I have used Advanced Tokens Manager to backup all the activation details.... so that in the near future if anything goes wrong, I do not have to go all the way, installing win 8, and 8.1 again and go through the activation process etc....
I think the issue is all about the recovery partition; probably win8.1 upgrade is using that to install on the active partition (i.e my C drive)
Good Luck to all that are looking for answers to resolve this issue, I hope this process works for everyone that are stuck. Probably Microsoft should reward us in some form for doing all that time consuming R & D