Because the installer wasn't correctly booted when you installed Windows 7 to D, it will not now show as C when booted into Windows 7 as it would had it been booted for install.
If you don't mind having Windows 7 on D drive then you can use free Partition Wizard
bootable CD to rightclick D to Modify>Set to Active, click OK. Then click on Disk 1 to highlight it, from Disk tab select Rebuild MBR, Apply. Reboot to see if Windows 7 starts. If not boot into Windows 7 DVD Repair console or System Repair Disk
to run Startup Repair - Run 3 Separate Times.
Once Windows 7 boots you can boot back into the PW CD to rightclick C to Delete, click OK. Then rightclick D to Resize, slide left grey border all the way to the left to take up deleted C space, click OK, Apply all steps.
You can also try cueing up Factory Recovery from boot to see if it still works, or if there are System Diagnostics available from boot try booting into them. If neither of these work you can also delete and recover the first partition's space.