By default Windows 7 will install the new drive and you will be prompted to restart the computer. Upon restarting the computer the drive should show up in the file browser (Window's Explorer, not to be confused with Internet Explorer) and then you can right click on the drive, select Format, and then tell it to format as NTFS.
Sometimes this process does not work so well. In that case you have 2 options:
1) Built into CMD you can use diskpart to partition, format, and mount your new drive. This is built into windows7, and is very powerful and quick to use when you know what you are doing. It is all done through a command line, which not everyone is comfortable with, and finding useful instructions can be difficult at first, but it is a tool worth learning. MS's directions on using this tool can be found here:
http://support.microsoft.com/kb/300415
2) Use PartitionMaster. This is an old professional program which has changed hands several times over the years, but is currently owned by EaseUS and has a home version that works great and is free to use. This is essentially a graphical interface for diskpart and a few other utilities to make it easier to use. In it you can simply select your new drive, set up partitions, format it, and assign a drive letter easily. The program can be found here:
http://download.cnet.com/EaseUS-Partition-Master-Free-Edition/3000-2248_4-10863346.html
Either way, you should be up and running with your new drive in no time.... just be careful to not format your system drive instead of the new drive... I have done that... pretty embarrassing and kind of a pain to fix.