6R1M01R3 :
I am pretty sure that now when you reinstall OS you get a choice to keep all files or not, the app data is moved to windows.old folder.
that's win 10, but he is working with win 7 which has no such feature built in.
new partition is easy. search for "disk management" and then right click your c:. chose "shrink volume" and shrink it enough to let you back up data you want to keep. then format the new partition and start moving data.
once you're done, then do the fresh install to c: and you're good to go. i ALWAYS suggest keeping data separate from windows and programs. this way if you ever need to drop in a windows disk you have nothing to lose except some time to reinstall programs.