My reading is simply that the partition that Win 7 is trying to install into is still a linux partition. As I said at the start, delete that partition before trying the install ! All messages you have reported are entirely consistent with that theory. When I told you to use Easeus, you need to create a bootable CD with easeus partition manager on it.
It appears Easeus now charge for a bootable version (fair enough, it must contain a licenced operating system), so here is a free one
http://www.ptdd.com/manual2.htm
Take the option to download Super Fdisk Bootable CD, which also contains a partition manager, which you must use to
delete the existing linux partition. Why? your linux partition is probably a linux type, and Win7 needs NTFS to install upon, but a retail DVD will do that for you, it just needs empty (unpartitioned) space on the HDD to do it on.
One other message you report might give you pause....it does not offer 'install' apparently, just restore to factory condition. This suggests to me you still also have a Win7 install partition, which the DVD apparently tries to use. It might still work if there is no partition (i.e. empty space), but if not, create an NTFS partition yourself in the empty space and try again.