product already owned = key wasted?

Yes, it can be reused by someone else.

Yes, you can use it again

Give me the key, I will confirm if it works :P
Kidding haha I think the key can still be used by someone else since you were not able to activate it :)

Steam just lets you know that you already own the license(s) the key encompasses - but it does not activate the key.
So you can make a GA with the key, you can give it to a friend, or whatever takes your fancy. The key is still good.

Well that was a very quick response :D, thanks a lot lads, much appreciated!

You can see the list of activated keys on your Steam account by going to "Account details" > "View licenses and product key activations" (= https://store.steampowered.com/account/licenses/). The most recently activated keys are at the top of the list, so it's easy to see whether or not Steam has activated a key you just tried.

While it will not use a key if you already own the game, it will not tell you whether that key is already used either. In case of a new key that doesn't matter, but if you are unsure whether a key is duplicate or not the 'already owned' message will be shown regardless of whether the key is still unused or not.