How big should I make the partition to put Windows 7 in? Also, after installing the OS, do I have to go back and make another partition with the maximum space left or will it automatically store everything separate from the OS?
How exactly will I partition this space for the OS?
Everything will be on one 500GB HDD with nothing on it.
Why do you want to partition the drive? If you really want to do it, make it large enough (60-80 GB). You'll have to go back and create an additional partition and then format it. Nothing is automatic; you have to configure applications to use the second partition.
Viruses usually attack the OS and applications, leading to possible data loss and/or corruption. If a virus affects your system, you may have to reformat the OS partition (or the whole drive), but you shouldn't have to reformat the data partition. However you may have to restore the data that was lost or corrupted. Again nothing beats regular backups. Important data should be backed up to an external device which should be kept separate from the PC. The hard disk could also fail, the PC could be stolen or damaged, etc.
Then you probably won't have to post something like "I lost all of my files; what can I do to recover them?". I don't know if all versions of Windows 7 include it, but a good backup utility is provided.