Confused noob with core i7 build and hard drive problems with Vista

Hi
Yesterday I built my core i7 system. This was my first ever build. The computer is booting fine, I can run the BIOS setup and see the three hard drives I have there: a Western Digital Caviare 500gb, and two 1.5Tb Seagate Barracudas.
But I am struggling to install Vista.
I did not format the drives or anything - did I need to?
Do I need drivers for them?
When I got to the screen Select drive to install Vista to, when I clicked my WD Caviare it gave me an error message which I can't remember now. The drive then vanished from the list.
When I tried to install it on one of the Barracudas - which were still showing - I got an error about the system volume. I can't remember the exact wording of these errors I am afraid because I just expected everything to work out fine.

Anyway, I then used Microsoft's help, and cleaned the WD Caviare using diskpart.

Now I am getting an error on startup on SATA1 (the WD Caviare) and Windows is not even running off the boot CD.

I am confused and becoming somewhat anxious.
Did I miss any crucial steps?
I have a ASUS P6T Deluxe V2 motherboard, 12gb corsair RAM, a 750W corsair power supply.
What should I do next?
thanks
Simon

Thanks - how can I do this format? Seeing as I can't get into Windows?

The first boot is set to the BluRay drive where the CD is.