If you don't want to buy Windows 7 to activate it then I'd reinstall Vista using
Vista ISO download and following these same steps for
Clean Reinstall - Factory OEM Windows 7.
If you want to buy Windows 7 then boot the DVD to reinstall to C. If it fails let us know at which step in
Clean Install Windows 7 and the exact error message in full.
You can also see if the Recovery partition will reinstall Vista by tapping the key given on first boot screen for Factory Recovery, usually F10.