Lost my key and having problems setting up the new one 
Probably because you need the license that is on your lost key, (and therefore also lost…).
Apart from that with a little bit more info on your actual problem, someone might be able to help you… 
Ok I lost my KEY I bought a NEW KEY from eBAY I need to put my licence number on My NEW KEY. When I put in my activation code I get this message that the CODE is already USED. How do I set up my new KEY to work like the old KEY
Like I said already: You can´t. Since with your OLD KEY, you also lost your Cubase license. And as you said since it´s already in use (though on your lost key and therefore with no use for you, but the one who maybe finds your key). The official version until lately was, you need to buy a new package of Cubase, to get a new license which you can then download onto your NEW KEY. The inofficial version is, you should contact Steinberg, and hope they´ll give you a new license fro free or something like that (hopefully your old license was registered before you lost it…)
There´s a lot of info on lost or defective USB keys in the Steinberg knowledge base…
Major bummer… Cubase is the licence, the licence is the USB key, no key no licence no Cubase 
Lets hope Steinberg support help you 
Oh I hope you don’t mind that I changed your emotions to better reflect your quandary.