Clean install here, using the old Vista double install method, or just putting in a Vista disk to show I have a previous version..

i tracked links back to this article which clears things up a bit. basically, an Upgrade disk will work on any activated Windows installation, even an activated Windows 7 RC install, but it will do a Custom install, not an Upgrade install (which explains the Windows.old bit). of course, i don't think RC1 can be activated after the March cutoff next year, so i'm not really sure what's going on here...

On Monday, Microsoft is expected to announce that it's done with Windows 7, and the code will be dispatched to manufacturers of PCs and the factories that will burn it onto retail DVDs.

On Oct. 22, you'll be able to buy the fruits of Microsoft's more than three years of labor. But many of you are already running an unfinished version of Windows 7 - the release candidate that was made available for download in May.

Chances are, you're running it on a computer that previously had another version of Windows. As Oct. 22 approaches, I bet you've been wondering: If I buy the cheaper, upgrade version of Windows 7, am I going to have to reinstall my old operating system before I install this one?

So far, there's been no clear guidance on this from Microsoft - until now. I've been asking a spokesman for the company about this for about a month, and he's finally been able to offer an answer.

It's an interesting one.

If you are running the Windows 7 Release Candidate, and you have activated it, you will not need to reinstall an older version of Windows before using an Windows 7 upgrade disk.

However, you will not be able to do an upgrade installation, in which your existing programs and data are left in place. Instead, you'll have to do what Microsoft calls a custom installation. This is essentially a clean install, but your existing operating system, programs and data are squirreled away in a folder labeled WINDOWS.OLD. You end up with a fresh Windows 7 setup, but you can access that folder to get to any needed data. (Sorry, the programs in there won't work - you'll need to reinstall them.)

That's good news for folks who worried they'd have to do two operating system installations to get the final version of Windows 7 on their PCs.

But there's a catch. If for some reason you later need to reinstall the finished version of Windows 7 from scratch using the upgrade copy you bought, you'll first need to install and activate Windows XP or Vista.

This is different from Windows Vista's installation procedure. Vista would let you install an older Windows OS, skip activation, and then install with an upgrade version. You can no longer skip activation when installing Windows 7 via an upgrade disk.

In other words, it's all about activation. The Windows 7 upgrade disk will need to see a valid activation - and that can include an activated copy of the release candidate - before it will install the operating system.

This should make life somewhat easier for those running the Windows 7 Release Candidate - so long as they don't have to do a reinstall later.

A major Windows 7 upgrade question gets an answer | TechBlog | Chron.com - Houston Chronicle

if i buy an upgrade package, then fetch an ISO of a full install disc and run that instad, can i use my upgrade license to activate a the installation? or does windows somehow know that i have an 'upgrade serial' and that i'm not performing an upgrade?