I can't honestly answer the 32bit-64bit question.
But I would highly recomend not using a Windows7 "upgrade" disk. I know its windows 7. But I had problems with windows 98 and xp and there "upgrade disks"
In fact, with the windows XP "update from 98" disk it was fairly common knowlege that it screwed stuff up in your system. and more times then not you would end up having to buy the whole deal.
anyways just my two cents, but I would just fork over the extra 120bucks and buy the full deal, and do a clean install.