Ok... only save pics, music, documents and such. Forget everything else. Once they're on the external, unplug it.
You're now going to do a full, clean install of Win 7.
Boot to Win 7 DVD. Use it to format your drive. Pick Custom install. DO NOT TYPE IN KEY NUMBER. Un-check Activate on connection and Do not check for Updates. Install Win 7. Once it is complete, it will give you 30 days to Activate.
Now you're going to upgrade from Win 7 to Win 7.
From within Windows, insert Win 7 DVD and hit 'Upgrade'. This go around you type in key number, check for updates and activate on connection.
After Windows installs the second time and is activated open Disk cleanup/ Cleanup Sytem Files and delete all setup files.
You are now the proud parent of a full clean install of Win 7.