According to Microsoft Technet Win7 forum, as long as you have a properly licensed Microsoft OS, you can upgrade to Win7. Win7 will ask is want to do a full clean install or an install in place. Go with the clean install. Here's the message I got:
Another user, Techwrighter, has replied to a thread you have subscribed to in the Windows 7 Miscellaneous Forum.
Thread Title Making sure on installing retail version
Started by: LilBro
Reply:
You've stated that you still have the XP disk(s) so you will be able to purchase and use the 'Upgrade' packs of Windows 7. You would need to ensure that XP is installed first, to 'qualify' the upgrade key you received with the upgrade pack.
The Windows 7 installer will give you the choice of performing an upgrade install or a custom clean install.
Do the consumer homework first though. If you find that an OEM System Builder pack is selling for less than a retail upgrade pack then in your circumstances it would likely be a better choice.
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