Win7 doesn't think I have enough space?

I have tried both an install booting from the dvd, as well as doing a custom install from XP, but cannot be successful in either case:

For the first case, Initially I had cleared off a drive, only to find that Win7 thought it was going to fail soon. Gee thanks. So I bought two more 640GB Samsung Spinpoint F1 raid edition drives, intending to use the two in raid 0.

Unfortunately Win7 didn't like my motherboard raid drivers. I tried selecting them just like I normally would have done had I been installing XP, but it just doesn't do anything when I ask it to partition the drive. It sees the 1.2TB drive, it asks me how big the partitions should be, but when it goes to work, it gives the circle/hourglass pointer for about 5 seconds, then comes back with no change having been affected. The drive still is reported as being 1.2TB unallocated

Win 7 won't even partition the drives when not in Raid. If I tell it to create a partition, it asks me how big it should be, and no matter what size I use -- 50 gig, 600 gig, whatever -- it just goes to the hourglass-like pointer for about 5 seconds, and then comes back with no change in the way it reports the drive (600 GB completely unallocated).

My next approach was to partition and format one of the 640GB drives within XP. That went off without a hitch. I created a 60GB NTFS partition and another of about 540GB. Rebooted from the dvd and tried again.

For the 60GB partition, it shows it as being size 58.6GB, 58.5GB free, type Primary. When I click Next after selecting it as the drive to which I want to install, it reports "Setup was unable to use the existing system partition because it does not contain the required free space." Same thing if I try the larger 540GB partition.

I also attempted to format a partition, which results in the same mouse pointer behavior (busy for a few seconds, then comes back with no change). I also attempted to delete a partition, which worked just fine. I then tried to create again but it failed as before.

Christ. OK next attempt is to do it from XP. I run the installer, click "Install Now" -- it says it is copying temporary files. After about 15 seconds it pops up an error message saying "Windows Setup cannot find a location to store temporary installation files. To install Windows, make sure that a partition on your boot disk has at least 685 megabytes(MB of free space. Error code 0x80070490 "

BTW right before this point I had decided to reinstall XP onto one of the new drives (not in raid) onto a 50GB partition. I created a 60GB for Win7 and a 490 gb for storage. The 60GB happens to be H: and the 490 is Z:. There are other drives in the machine.. the boot drive is on SATA1 (of 4). C: (XP) has around 35GB free, H: has 60GB free, and z: has 490 GB free.

So obviously there is plenty of space. What the devil is wrong with this installer?

System is:
AMD X2 4400+ (at stock speed)
2GB corsair XMS DDR400 at conservative timings autodetected
ABIT "Fatal1ty AN8 SLI" motherboard (Nvidia nforce4 chipset)
Seasonic S12-600 power supply (600watts)

Thanks for any suggestions... beyond building a new system of course. I do intend to build an Intel I7 machine when the motherboard prices come down to $100, but it would have been nice to see win 7 early

i want to add, i am very disappointed in windows seven installer. why do you hurt me and steal my time?

Bump. Having exactly the same problem two years later - I get this message whether I try to install from the .iso on a hdd or burned to a DVD. I have a clean 40GB hdd in my machine I wish to install 7 on, running and dual-booting it with XP while I change OSs. Although the disk I want to install 7 onto is not the first or 'boot' disk there is 17GB unallocated on the first disk for 7 to use if it wants - but it seems it doesn't. Could the problem be that all the disks bar the one I want to install 7 onto are dynamic, and therefore not recognised by the 7 installer?