This happened to a friend of mine as well. It really, really needs to be fixed. If it isn't, he won't be able to play with his legacy character at all come phase 3 of beta.
This seems to have happened to a lot of people, and the confusing SE account management system is to blame. If you participated in the original 1.0 beta and then bought the game, there is a good chance that you have two Final Fantasy XIV accounts. While it was possible to use your FFXIV 1.0 Beta account to register the retail version, that was not the most obvious choice during game setup. So a lot of people ended up with two "service accounts": one from the beta and one for the regular version. The screen where you select service accounts makes no mention of which is which.
The beta invitation email that listed his beta registration code was confusing, saying something like "FFXIV account 1" through "FFXIV account 8" or something, with a registration code listed next to "FFXIV account 1" and all of the other rows blank. So when he was presented with a screen on the SE account management system with two different XIV accounts, he chose the first one.
Wrong choice. That was the deactivated 1.0 beta account (not that he had any way of knowing). Now he's screwed.
I really hope that SE does two things:
1) Give out new beta codes to those who have registered theirs to the wrong FFXIV account. This happened not because they are stupid, but because the Square Enix account management system is confusing.
2) Overhaul the SE account management system for ARR. Make it simple to use!! How about having a link directly from the Lodestone that takes you straight to your FFXIV account without having to navigate the account management system to get to it. And rather than a "service account" section, call it something like "My Games". From the selection screen, list whether an account is active or not, and when it expires.
Setting up and managing accounts has to be simple. I saw several criticisms of the account setup and payment process in reviews of XIV version 1.0. This may have been lost among the other criticisms of the game, but several reviewers found it to be a problem. With all of the blood, sweat, and tears that have been poured into making XIV version 2.0 an excellent game, it would be a shame to leave the account management system as it is. For the sake of the game and the people who have worked on it, please get this right, SE!
No more confusing tabs on the left-hand side of the screen like "List Options Continued Automatically", "Review Service Fees", "Select Service", and "Confirm Account Status". All of those appear on the left of the screen with no indication as to what they apply to. Are they talking about my SE "account", or individual game "accounts"? Which "service" are they talking about? What do you mean by "options continued automatically"?
This would be much easier if there was just a "Games" screen with tabs for each online game I used, telling me whether the account was active. Then when I click on "Final Fantasy XIV" you could show me my subscription length, how much I'm paying, and when my next billing date is. It should also list my characters and retainers (assuming retainers will be tied to your game account in 2.0).
If Square Enix has any doubts as to how this should be done, take a look at how other MMOs handle their account systems. I have found almost all of them more intuitive and easier to use than the SE system. Please, don't get this wrong as you launch 2.0!
(Yes, this really happened a friend of mine, and not me.)