Any ideas anyone? :)

Hi gups, You can't do an upgrade from XP to Win 7. However, I think that the disc dell supplied you is an full Win 7 Pro disc, hence an clean install. What you can do is to go into Control Panel, Disc management, then create another partition, then install win 7 Pro there, and duel boot. Or put another drive in, and install Win 7 Pro there, and duel boot from there.

Yes, during the setup you have the ability to delete and create partitions.

You can do a clean install with an upgrade disk. Lots of us have done it. Just boot to the win 7 disk without removing win xp or vista and do a custom install with format. It's not a good idea to dual boot with XP especially on such a small drive. You'll want to get rid of XP or the bootloader file will be on the xp partition. I recommend you don't make 3 partitions for win 7. It will run better if you use the whole drive and use the Libraries to keep track of all your music and data instead of separating the files like in the old XP days. Get an external drive for backups and file storage and management.

your hard drive will all ready have 3 partitions on it, 4 if you have media direct installed. You will most likely not be able to repartition the drive due to the number of partitions limit. Your better option is to get a second hard drive in which to install 7 and therefore setup a dual boot system. 

Now if you are willing to forgo your current XP set up and start fresh then you will have to reformat the whole drive and start clean making new partitions.

Thank you all for your response!

I think I will go ahead with a clean install and install at max 2 partitions. From your replies, it looks like I will have a chance to repartition the drive upon a clean install. I want to keep the OS and system files on one partition and the rest of my data, music, pics, etc. on another partition. Once I have done this, I will update the post. Thanks once again!