You own a retail copy of Windows 7 for life; it can migrate to whichever machine you want as long as it isn't on more than one machien at a time.
Boot from the DVD, select Custom Advanced drive tools and format the HD before installing.
Afterwards, run a Repair install from the new desktop and it will accept the key if you have an upgrade version. A repair install is an Upgrade over itself, which sees itself as the qualifying OS for Upgrade version use. There is another registry workaround online if you don't want to do this.
If your DVD fails to prompt to boot at startup, then you need to enter BIOS setup by tapping F-key given on first bootup screen, normally F2. Set DVD drive first to boot in BIOS setup. Or use the F-key given for Boot menu to trigger one-time boot from DVD.