Hi,
In the process of going through my installation media, I found a DVD of Vista Ultimate SP2 x64...
Out of curiosity I installed it as I did the Win 7 in my previous post, saved an image, and attempted an upgrade to Win 7 SP1... It was eventually successful after a couple of retries... No Windows.old again..
I tried two different DVD versions of Win 7, and they both hung at 18% of "Expanding Files"... The message was that "Your Computer Needs To Restart", but wouldn't... Just kept cycling between messages.
It turns out the culprit was the "User Account Control" in Vista SP2...
I turned it off and everything went smoothly... I had forgotten how fast Vista boots\restarts as compared to Win 7...