Please remember to backup or save your files, docs, photos, music, etc. to another HDD or another primary partition on the disk before you do a clean install of Win7 on your existing HDD - deleting the partition and formatting the drive will pretty much render everything on the HDD (or that partition) unrecoverable.
if you mean a folder called "windows.old" then I'm not sure it's hurting anything (as long as you're not out of HD space). I would see about archiving it somewhere, or renaming it something else, run for a while to make sure you don't need it, then just delete it. The install presumably moved everything you need to your current windows folder.