Before you proceed with upgrading from Windows 2007 to Windows 7, you need to back up all of your data. You can use any of your favorite backup programs or do a simple copy-paste.
The Windows Upgrade CD also contains software for you that automatically determines and backs up your data to any removable drive or a separate partition.
To use the Windows 7 Wizard, open the installation DVD and browse to the folder labeled Support. Double click on migsetup.exe to launch the Windows Easy Transfer tool (Fig 1). Once you tell the Wizard about what method you wish to use for backup, it will automatically detect files for backup (fig 2) and save them to the specified destination.
Once you are done with the backup, put the Windows 7 Installation Disk into your DVD Drive and reboot. While rebooting, select the Boot from CD option. The DVD presents two options: Upgrade and Custom (Fig 3). Select the Custom option. Choosing the first option will abort the installation after running for a while. Wait and follow the prompts until you get the new operating system.
Once done, install an antivirus and a firewall and connect to the Internet. Download Windows Updates and check for latest versions of device drivers. There are high chances that you will find better device drivers than those shipped.
After upgrading from Windows 2000 to Windows 7 and updating Windows, you will have to install the device drivers and programs again. Restore the backup.
TIP: To save this state of HDD, I suggest you use disk imaging software to save a Volume Shadow copy so that you do not have to undergo the process again. If you do not have any, I recommend the FREE Macrium Reflect VSS based Disk Imaging Software with Rescue Disk.