I suggest you leave the original drive as is. Playing around with trying to repartition the drive to make room will just risk wiping your data.
Install 7 on the new drive and use that. Use your original drive as a backup. http://www.sevenforums.com/tutorials/31402-clean-install-upgrade-windows-7-version.html
Thanks , hang-the-9: My new HD actually arrived yesterday. I guess this will be my project for the weekend. thanks for the link.
Another bit of advice for anyone else viewing: keep that recovery disk in a place where you will find it a year later !