A) is this the best or would things kind of plug and play with the old hard drive?
Not sure I understand this question but you can certainly reuse old hard drives - I do that all the time.
B) how do I clear my old hard drive? I can't delete system files while its running my current build and I need to have it empty for the start of the next one... does it automatically format when I install windows with the new mobo?
When you install Windows 7 it will give you the option to do a quick format of your drive when you launch the installation. You want to do a quick because sometimes doing a full format can erase your HD's boot manager.