Windows 7 install freezes on reboot

Need some help identifying the underlying issue. I have a Dell Inspiron 531 that came with Vista Home premium installed. Vista started giving me problems - wouldn't boot up or the computer will freeze while running any program, took ages to open a file when it did, etc. Did a chkdsk /r. The process would not complete and got stuck in step 5 of 5 for 2-3 days with very slow progress. So, decided to reformat the drive partition (full format) and install Win 7 home premium. no issues identified in drive format and Win 7 installed smoothly. But then Win 7 tries to download all the needed updates, install them and tries to re-boot. Freezes during reboot with Win logo and message Windows rebooting. I can see the hard drive LED is on so it has not gone in sleep mode.

So, not sure what is the main issue. Is my hard drive dying - but then it should have identified some issue during formatting. Is there some other issue with system files? Am I missing or do I have a corrupted file somewhere that is resulting in the issue? Have run memory checks before installing Win 7 - no issues identified. The hard drive is 300GB and I have 3GB of RAM. Any suggestion before I give up an trash the system. Thanks.

Thank you both indianacarnie and gator for your suggestions. I will follow them and post the outcome or questions.

If the problem is only with reboot from Updates, then try installing the Updates in smaller groups starting with Drivers in first group. Each group will set a System Restore point so if necessary you can restore before it and then install that group's updates singly to find the one causing the problem.

Also compare the install you did with the perfect install compiled in Clean Reinstall Windows 7 which has been used by over a million consumers to get and keep a perfect install without a single complaint or reported need for repairs when these steps were followed.

Well mixed success but same problem shows up again - here is the update - I followed the clean install process outlined above - for some reason it took nearly a whole day to reformat the 200GB hard drive - seems a bit unusual, but it did complete the formatting. I was able to install Win 7 and was even able to download a few of the updates and install them. This required re-booting the system and I did not see any problems in the process. But then during one of the updates - the system froze again. Let it go for several hours before I hard rebooted the system. During reboot I tried to restore it to previous install point - it got stuck - let it go for over 12 hours but no luck.

This is very similar behavior I had seen when I had Vista installed on it. So I am wondering if I have a hardware problem - not sure what - but is it possible that this behavior is because either my hard drive is getting flaky, or is there some windows update that is not compatible with the hardware I have installed on my system. I currently have a Dell Inspiron 531 with AMD chip, 2GB of Ram and 200GB of hard disk space. The system is from mid 2007

Any suggestions? Is it time to either replace the hard drive, or bite the bullet and replace the entire system?

Run Dell Hardware Diagnostics from F12 Menu .

Look at the hard drive to see the maker, run the maker's HD Diagnostic extended CD scan to confirm the condition.

Thank you all for your suggestions. It turns out that my hard drive was on its last stages - that is what was causing all the problems. Interestingly, it was still able to format the drive, although it would only find 200GB of space to format on a 320 GB drive. I would also be able to do a clean install Win7 but the system would hang intermittently while restarting, updating or booting from shutdown.

So, as suggested by gregrocker I used the Dell tools to check my hard drive got a bunch of read errors so decided to get a new hard drive. Installed the drive a couple of days ago, did a clean install of Win7 - the system has now been up and running for last 2-3 days. I am slowly installing other programs and transferring my data (I had fortunately backed it up before all the issues showed up).

So, once again thank you all for your suggestions and the time you all took to respond to address my issues.