Quess I'm slow, but will add anyways.
What I would do:
.. Remove Old HDD.
.. Do a clean Install of Windows 7.
..... You do NOT have to re-install vista. You can use your Upgrade W7 disk. Just Select Custom install and DO Not enter your key when propted to.
..... Will post steps to follow.
.. Once windows is installed on New HDD.
Connect HDD to either a SATA - > USB cable, or get a usb sata enclosure and put HDD into it.
.. Plug old HDD into USB port and transfer all of your Files/data.
... NOTE. You can even copy the favorites director contents from old HDD to new HDD.
Added: How to use the Upgrade disk to do a clean install:
A true geek has never been intimidated by the registry, but lets face it, it's a mess in there. To access the registry you will first need to open up the start menu and type "regedit" into the search field, followed by enter. To find the proverbial needle in this haystack, you will need to navigate through the tabs listed on the left in the following order:
HKEY_LOCAL_MACHINE/Software/Microsoft/Windows/CurrentVersion/Setup/OOBE/ . If you don't like doing it the hard way just click Edit then Find and type MediaBootInstall into the search field, and press enter.
Once found, double click MediaBootInstall and change the "1" to a "0". Once you have finished this, simply click Ok and close out the Registry Editor
PLUS
Before we try to activate our copy of Windows, we need to reset or "Re-Arm" the activation sequence. To do this, simply open up the start menu and type cmd but instead of just pressing enter, you need to press "Ctrl" + "Shift" + "Enter" to run it as an administrator. You can also accomplish this by clicking the start menu, typing cmd into the search box, then right clicking the command prompt application and selecting Run as administrator.
Once the command prompt appears type slmgr /rearm and press enter. Next simply type Exit and hit enter again, after which it will ask you to restart your machine.
Complimence of :
http://www.maximumpc.com/article/howtos/how_use_your_windows_7_upgrade_disk_fresh_pc?page=0,1