Georeferencing a project map(raster) with an Arc basemap with the same projection

Here is the deal..

I have a map (raster) which is already in a projected co-ordinate system. I know this cause the map says so. Now I want to geo-ref this to a Arc basemap.

I bring up a basemap, set the dataframe to the same projected co-oridinate system as the raster then bring in the raster. Now since there is no link between the raster and the basemap (even though they have the projected co-ordinate system), the raster displays in a random area. I want to now move the raster in its correct position but Arc greys out the georeferencing tool in which I was hoping to add control points and then click update display.

I'm missing something but not quite sure? Do you necessarily have to work in a Geographic coordiante system, do the georeferencing there and then project the raster?

Help!!