Can you trigger the Dell Recovery partition to return your computer to factory condition in order to Update BIOS?
If Recovery partition will not run using cNTRL + f11 or whatever key combination they tell you to use, then you have nothing to lose and can wipe the HD which might stop one of the utility/boot partitions from interfering with install.
Boot Windows 7 install DVD Repair console or Repair CD, choose Command Line, type:
SELECT DISK # (replace # with Windows 7 HD)
CLEAN ALL (zeroes HD for deepest clean, takes about an hour per 320gb, drop "all" if you want shorter)
Now boot back into the installer to attempt Custom install, using Drive Options to create New partition and Format.
Try also removing all but 2gb of RAM to try install, reset the CMOS: Clear CMOS - 3 Ways to Clear the CMOS - Reset BIOS
What is the SATA controller setting? Try AHCI, then IDE.