Yep, a 'Clean Install' is always recommended, saves the type of hassles you're experiencing... if you have huge amounts of data to back up and no external storage, it's possible to create a new partition to re-install Windows. Then remove the old Windows when you're done.
Depends on whether you have data to recover.
You should still be able to use the installation disk to get to the 'Where do you want to install Windows' screen. There you can format drives/partitions etc. though personally I prefer to use a bootable version of EaseUs Partition Master. If you have no data to recover, simply format the drive where you want to install Windows under 'Drive Options (Advanced)