About to install 7 using usb flash drive

so Im about to install windows 7 ultimate 64 using a 4gig flash drive, i am currently running vista home 32 and i used The_Prophe​cy's 2nd method of transferring my win7 to my usb. my questions are

1. i do not have a free hard drive to do a clean install with this affect the installation? or is it like xp and format it for me?

2. i have a PII 550 black unlocked and over clocked to 3.5GHz should i set it back to default for the install?
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More about about install flash drive
  1. 1) You will be able to overwrite the existing OS installation. Just tell Win7 to install to the partition where Vista currently is. The files from the Vista install will be dumped into a folder called C:\Windows.old. A reformat is optional (must click Advanced on the screen where it asks which partition to install Win7 to), but not necessary.
    2) If you have had any instability with the CPU at that overclock, you should definitely scale it back. You don't want any errors during the OS install. Even if you have not had problems, I would probably set the CPU back to its defaults anyway. The install will be limited by the speed of the hard drive and flash drive, not the CPU.
    Remember to back up your data before installing Win7!
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