I bought Combined Operations. ArmA II works without any problems, it's just OA that has the bad serial number in setup error. Thanks for the welcome by the way, appreciated :).
Yeah I've tried reboots, restarts everything. It's not seeming to work out.
EDIT: Okay I got the game to work it was a strange problem with steams installing the game. Apparently OA has no "KEY" binary code inside of it. For future reference I made a step guide for anyone else who gets this error and it might just help the situation more. Also 90% of the credit goes to the steam help support. This is easier for Combined Operations.
STEP 1:
First go to START> RUN
STEP 2: Type "regedit" (picture below)
http://img826.imageshack.us/img826/7269/step1a.jpg
STEP 3: Go to HKEY_LOCAL_MACHINE and look for the folder called "wow6432node" (Picture Below)
http://img832.imageshack.us/img832/8136/step2t.jpg
STEP 4: Click "wow6432node" and locate the folder "Bohemia Interactive Studio" there you will see the ArmA folders. (PLEASE VIEW Picture Below)
http://img153.imageshack.us/img153/4053/step3k.jpg
Step 5: After viewing the picture above you'll need to edit the binary of the key to do so view the picture below (MAKE SURE YOU SELECT ALL or whatever you can select THE BINARY INSIDE OF IT! EVEN THE GIBBERISH!)
http://img265.imageshack.us/img265/9475/step4xz.jpg
Afterwords load Operation Arrowhead and it should load for you. That's the best I can do after stumbling on the problem, I was able to get into multiplayer no problem too. Cheers and hope it works for the rest of you. If you have just the expansion OR the original you'd have to work on the binary yourself or ask the company to provide you (with the appropriate key) the binary for it.
Now before I get people complaining about this, this way was for some reason the ONLY way I could have had it worked. I've reinstalled everything (wasting bandwidth as well) yet for some reason it would not produce the KEY. I have bought these games and STEAM wouldn't make the key even with the verifying cache and administration mode. Either way I can play now.