You just got a new license file and a dongle and you are installing ArcGIS for the first time:
You are getting a new license file to update your expired one and/or you want to be able to switch back and forth from using your license file and dongle to connecting to a license server running somewhere else:
NOTE: If you have LM_LICENSE_FILE and/or ESRI_LICENSE file Environment Variables set, you may need to disable or change them? They are found in Start > Settings > Control Panel > System: Advanced: Environment Variables
Maybe there is an easier way to do this? Surely lots of this is wrong, out of date, etc? Let us know.
Editorial content: Apparently what is happening with a dongle is you are making your own computer a "license server" so that it serves the license to itself, as opposed to connecting to a remote server that serves the license to you. Whatever. While this is all fine and good for people who (want to) understand such distinctions and intricacies, it strikes this somewhat non-technical user as another example of a company passing along its internal problems to its customers, the same crappy thing that banks and airlines do (and most recently, the US Postal Service).
So, to ESRI in this case I say: Keep the process simple. I don't care about how your technology works or what it can and can't do. Your goal should be to: