Once you install the new HDD, you will have to go into BIOS and set the Boot Drive to the new hard disk. As your new HDD is a smaller size, it should be easy to pick out in the BIOS. Then you can boot up on your OS installation CD and install the OS onto the new hard disk. The old hard disk will then just appear as a secondary drive that you can use as a D: for storage.
Just unplug the old hard disk if you have data on it in case you accidentally install the new OS onto your old hard disk and wipe all your data. Then plug back in the old hard disk once your new hard disk is all setup to go.
I'd say no. I can't remember the last time i had to worry about master/slave. Most modern computers, I've done it all in the BIOS.
Also in the BIOS, make sure that the new HDD is the First One and the old HDD is second in sequence order. After you've plugged in the new HDD, just double check the BIOS as I had a motherboard which kept resetting the HDD order every time i unplugged/plugged a new HDD. It was most annoying but they did eventually fix it in one of the BIOS upgrades.
Thanks again. Haven't worked too much with the newer BIOS but understand the process is much better that on the old iron I'm currently running. I've got a Dell GX260 that's on its last legs, so I'm moving to the 8500. It comes with Windoz 8 but I think I'll install Windoz 7 on the new HDD (I may spring for a SSD) and wipe the 1 TB drive. What do you think about this idea?
The only thing I would do is clone the original Windows 8 in case you have any driver issues with Windows 7 and have to fall back to Windows 8. Clonezilla works pretty well as the clone tool because it only clones the used space and not the entire HDD.
Or leave the old HDD out, plug in the new SSD and get Windows 7 running on it. Once Windows 7 is up and running, you should be able to plug in the old HDD and it should get picked up and you can use it as storage. You'll know immediately that BIOS is not correctly set to the correct HDD sequence if it boots up off the old HDD rather than the new one.