Are you booting the DVD (not CD) in a DVD drive?
How to Boot your Computer from a Bootable CD or DVD
The error you are getting means it's bypassing the DVD and attempting to boot the HD. Make sure the DVD drive is set to boot first in BIOS, before HD. Are you getting the telltale "Press any key to boot DVD?"
Or use the one-time BIOS Boot Menu key given on first boot screen to trigger the DVD.
Once you boot into DVD, select Install Now, Custom install, use Drive Options to delete all partitions, create new as desired, full format before installing Windows 7 to first partition. Ignore the 100mb boot partition Windows 7 creates to place the Repair console on F8 Advanced boot Tools menu.