The correct way to uninstall Windows 7 is to delete it's partition in Disk Management. So if you can move your data off to external HD, another internal HD, DVD, or upload to 7gb free storage for each Windows Live ID on Skydrive.
Then boot the installer to delete all partitions and create new as you wish, follow these steps to get a perfect Clean Reinstall - Factory OEM Windows 7 -
they're roughly the same steps for retail as for OEM.
If you can't move your files off then try shifting them to another data partition you create by gradually shrinking C until you can format it and reinstall. Use Partition Wizard resize function to do this: Partition Wizard Move/Resize Partition Video Help.
Or as a last resort if you still want to keep the old OS, when you shrink the new install partition and install on it then the installer will configure a Dual Boot with the old Windows 7 no matter what - although you can hide it in Startup and Recovery settings.
An easy way to link your files from the old partition is to rightclick on each User folder in new Windows 7 to add it to the relevant Library - Include a Folder - Windows 7 Forums
. The old User folders will then appear whenever you open your Documents, Pictures, Music, Favorites, etc. - you'll have to add Downloads, though.