Dave,
There certainly would not be a problem installing both OS's to the same physical HDD, which would enable you to clean your old one. Windows7 will install a boot loader which will enable to to select the OS you want to use whenever the PC is switched on/restarted via windows. If you get any problems, please feel free to pm me and I'll help wherever I can, (though you shouldn't need any help, it's a straightforward and painless process).
Regards, Peter