First you will be prompted whether to use Recovery Console or install. Select install. It asks you where do you want to install Windows. You select the location where you have Windows at the moment. Setup will complain and ask you if you want to remove the old Windows or install on top of it. You say you want to install over the old one.
Your installed programs will be kept intact. Some thing may need ro be registered again (I think I had problems with Office wanting to see the registration key again). The more common settings in the registry lke wallpaper and such will remain the same, some things will be reset.