There are three Windows 7 installation methods:

Method Issues

A custom (advanced) or clean installation is performed on an existing or new PC and

installs Windows 7 with fresh settings. Choose a custom (advanced) installation of
Windows 7 in one of the following cases:

There is no operating system yet installed on the computer.

The installed operating system does not support an upgrade installation to
Windows 7.
The computer has more than one partition and needs to support dual-boot or
multiple-boot configurations.
You prefer a clean installation.

When performing a custom (advanced) installation on a computer which already has a

previous version of Windows,

You should perform a backup of the existing system.

o You can use the backup to restore user data to the new installation.
o If you are unable to complete the installation, you can use the
backup to restore your existing system.
Windows 7 creates the C:\Windows.old\ directory and retains system and
user files from your previous operating system in the directory.
o Files in the system-created directories are placed inside the
Custom Windows.old directory. These directories include:
(advanced) Documents and Settings (Windows XP) and Users
(Windows Vista)
Program Files
Windows
o Files and folders outside of the system-created directories are not
touched (unless you repartition or reformat the hard disk during
installation).
You can install Windows 7 onto a different partition or hard disk to keep an
existing operating system installation (such as Windows XP) and user data.
Use this option to create a dual-boot system, or to access your existing user
files when booting into Windows 7.

Be aware of the following when creating a dual-boot system:

Windows 7 must be installed on a partition that uses NTFS. Windows 7 can

read a FAT16 or FAT32 partition, but cannot be installed on one.
When installing different versions of Windows on the same system, install the
oldest version first, and install Windows 7 last.
Programs and drivers must be installed on each operating system.
To boot from a specific installation on the dual-boot system, use BCDEdit to
modify the default Boot Configuration Data (BCD) boot entry.

An upgrade (also known as in-place) installs Windows 7 on the same partition as the
Upgrade existing operating system, but maintains applications, user settings, and user files. Be
aware of the following:
 You can upgrade from Windows Vista service pack 1; you cannot perform an
upgrade installation from Windows XP.
A Windows 7 upgrade automatically rolls back to Windows Vista if there is a
failure during the installation process.
You can also roll back to Windows Vista if you have not performed a
successful log on. If you want to return to Windows Vista once you
successfully log on to Windows 7, you must perform a clean Windows Vista
installation or restore the system from a backup.

A migration copies user files and settings from an existing computer to a new Windows
7 installation. Use a migration when you would like to upgrade to Windows 7 but an
upgrade is not supported, or if you want to perform a clean install but retain your
current user settings and data. To perform a migration:

1. Save existing user settings and data to a temporary location.

Migration
2. Install Windows 7 on the same computer (over the existing operating system)
or a new computer. For example, you might perform a migration on an
existing computer that cannot be upgraded to Windows 7, or on an existing
computer if you just want to start with fresh operating system settings.
3. Transfer user settings to the new installation.