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"Introduction
To upgrade your PC from Windows XP to Windows 7, you'll need to select the Custom option during Windows 7 installation. A custom installation doesn't preserve your programs, files, or settings. It's sometimes called a "clean" installation for that reason.
A custom installation is more complex, and it can sometimes take a couple of hours to complete. We created this five-step tutorial to help guide you through the entire process each step of the way.
What you need
An external hard disk. You'll need to move your files off of your PC before you install Windows 7. To make this easier, we recommend a free download called Windows Easy Transfer, which will require an external hard disk. They?re readily available at electronics and office supply stores, and they provide an easy way to add additional storage space to your computer.
The original installation discs or setup files for the programs that you want to use with Windows 7. You?ll need to reinstall your programs by hand after installing Windows 7. When you run Windows Easy Transfer you will get a report that lists the programs that you are currently using with Windows XP."
http://windows.microsoft.com/en-US/windows7/help/upgrading-from-windows-xp-to-windows-7
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