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Yes, when restoring the system image, it will format you Windows 7 partition and then restore the image to it to have Windows 7 as it was when the system image was created.
The link below from Gateway will show you how to create a set of Windows 7 Recovery Discs and a Applications and Drivers disc for your computer. These will let you format and restore Windows 7 back like it was the day you first turned on your computer.
Gateway Support - Create System Recovery Discs for the Applications and Drivers External Media in the Gateway Recovery Center