If you delete the partition, Windows will be gone. You may as well format and reinstall then.
I'm not clear on why this partition exists in the first place? Windows 7 as a rule installs to the default bootable partition, which is C: unless you tell it something else. It doesn't just randomly create new partitions.
Is this a custom built or OEM PC?
From what I understand, if w7 finds a ntfs partition on the hd, it will install without creating any new partition. But if the hd is new (and mine was a new pc), it'll create a 100mb reserved primary partition for boot, and then install on another one. I dont like this because it uses up one primary slot... anyway i just got rid of it... using diskpart with the w7 recovery cd...