The system_drv partition contains the boot files required for Windows 7 to boot. If you delete it, Windows 7 will not be able to boot. The solution is:
1) Make a system repair disk (not the R&R disk). I think you can make it from the Backup restore console. System Repair Disc - Create
Alternatively, you can download a copy from Download Windows 7 System Recovery Discs — The NeoSmart Files
2) In Disk Management, mark the Windows 7 partition active by right clicking on it. Reboot.
3) On reboot, you'll get an error. Insert your repair disk and do a startup repair. Startup Repair
You may need to run Startup repair upto 3 times.
That should fix the boot and make windows boot up properly.
After that, you should be able to delete the system_drv partition. When you go back to Disk managemrnt, system_drv partition would no longer be labelled SYSTEM or ACTIVE.
I dont know about Disk 1. Its a separate disk, usb or inbuilt card? You cant merge 2 separate disks.