How do I reformat a hard drive after transferring Windows 7 License?

I've ordered new parts for a new computer and I read that I could transfer the license being used on this (current) computer to the new one because I have the full version of Windows not the OEM. I plan on (if possible) transfering my windows 7 license to the new computer/SSD and use this old hard drive for storage/backup. But I'm a little confused/unsure about a few things:

1. Do I install Windows 7 and activate it on the new computer/SSD first and then remove Windows 7 from the old hard drive? Or do I have to remove it from the old computer before attempting to install on the new one?
2. How do I remove Windows from the old drive? I haven't reformatted before but from what I've read from guides, I use the windows CD to reformat, but it reinstalls a clean version of Windows. How would I clean the old drive without reinstalling Windows?

1) It doesn't matter. The main point is to not have Windows running on two systems at the same time.

I have read claims that a PC will check in with the activation server when the PC is online, and if the server sees the wrong hardware, Windows will be deactivated on the PC and the license key will be blocked. I'm pretty sure that it wasn't that way in the XP days - the only check was performed during the activation - but I can't swear to what is true now. (WGA adds an additional complication. That WGA still exists leads me to believe that MS does not de-activate duplicate installs.)

2) Using the Windows DVD, you can remove partitions from a drive, create new ones, and format them. Begin a Custom install, then go to Drive Options (Advanced). Once you've got the drive configured the way that you want, quit the installation.

Some people find it more convenient to use a third-party solution to for formatting, but I do it so rarely that I haven't bothered downloading one.