Installing Windows 8 doesn't dual boot with Windows 7

Since you decided not to recreate the 200mb System Reserved partition I don't know if the Recovery or Tools partitions are bootable now. You should find out by trying to generate your Recovery Disks or queue up HP System Recovery.

If so you can resize C to create a space for Win8 now without having to worry about it converting the disk to Dynamic since you're entitled to four primary partitions. Partition Wizard Resize Partition Video Help.

If not you can keep HP Recovery to try to add it using EasyBCD if you ever want to run Recovery, or if you've made your Recovery disks and/or don't have any use for the bloated factory image you can delete Recovery and Tools to use their space for Win8.

I have created the 320 GB partition for Windows 8
but the HP_TOOLS partition has disappeared from the disk management but it is there in Partition Wizard
Here is the Screenshot of Disk management



Here is the Screenshot of Partition Wizard



Is that Okay?

Tap the F2 key at boot to see if HP Tools partition will still boot into System Diagnostics.

Then tap the F11 key to see if it will queue up HP System Recovery. If so see if you can generate the HP Recovery disks if you have not already done so.

If not then since these partitions don't now function anyway due to loss of System Reserved partition or other problems you had, you can delete them to recover the space. Otherwise there's a slight chance that you could later get HP Recovery to boot from within Win7 by adding it to a Dual Boot using EasyBCD.

However you should be aware by now that most tech enthusiasts would never run the bloated HP preinstalled Win7 since it contains the worst load of corrupting crapware in the industry, which throttles Win7 native perfect performance. So a better option all-around is to achieve the Clean Reinstall - Factory OEM Windows 7 deleting all partitions during reinstall, and after making your Recovery Disks which should have been made when you set up your PC.

Once you have a perfect clean reinstall, you can save a Win7 backup image externally or to another HD to use in place of Recovery, even save an image on the same HD in a Primary partition if you lack external.

I am able to boot in system diagnostics but cannot queue up the System Recovery.
When I press F11 it shows in the lower left corner of the screen " F11...System Recover"
but after that the Win 7 starts
I have created the the system recovery Discs so that is okay for me.

I want to make a clean install of windows 7 but I can't find an official ISO of Windows 7 Home Basic x64

In that case you can delete all of the partitions except HP Tools during install using Drive Options shown in Steps 6/7 of Clean Install Windows 7, create new partition(s) as you wish and install to the first large partition. It may create for you a 100mb System Reserved boot partition which you can ignore.

If your licensed version is Home Basic then download Home Premium and run the eicfg removal tool on it to unlock all version, choose Basic during install. Everything you need to get a perfect install is in Clean Reinstall - Factory OEM Windows 7

Thank you very much gergrocker.
I have successfully installed windows 8 pro with dual boot.

Good work.