I have an old pc. It's an AMD Athlon 64 X2 4200+ running Windows XP. I want to try and run Windows 7 32 bit on it. I don't want to lose all the data on my 250gb XP hard drive, so I was thinking of getting a 500 gb hard drive and a 32 bit Windows 7 oem and installign Windows on the new hard drive. 500 gb hard drives are pretty cheap now anyway. I'm looking to do this pretty much because I can't afford a brand new computer, but I could swing the cost of a new hard drive and Windows. My concern before doing this is if it would work. Would a newer hard drive not work with somewhat older components? I know I would probably need to do some updating of drivers, but I'm fine with that. Also, even though it can't read it all, I have 4 gb of memory, so the standard 2 gb that this computer came with would not be an issue.

As long as a new HDD can connect to the motherboard, you should be fine on that issue. AFAIK, all new HDDs now have a SATA interface, so your mobo would need a SATA connector. That's the main thing to check just off the top of my head.

tip:
make sure to remove the 250gig when doing this just as a precaution ,dont want to format it by mistake [i did once wayback when ]

Yes. My plan was to disconnect the 250 gb to preserve the XP installation in case anything went wrong. The mobo definitely has sata connections. The current hd is connected to it that way and it has a few free slots for expansion. Awesome. Maybe I can actually do this and partially enter this decade. :-)

Download the compatibility tool. Depending on the age of your hardware, you may have some hardware that Windows 7 does not support (I had a C-Media AC97 card and a RealTek 10/100 NIC that blocked my access).

Download the Windows 7 Upgrade Advisor from microsoft here:
http://www.microsoft.com/en-us/download/details.aspx?id=20

It will tell you what is and is not compatible with your computer.

Windows 7 32 bit edition requires 16gb of free hard drive space and a minimum of 1gb of ram. In addition you will need a video card capable of supporting the new Aero interface. The upgrade advisor will let you know if the computer contains all of that.

If you leave the hard drive in and connected and install to the new drive you will be able to dual boot windows. It will allow you to switch between windows 7 and windows xp depending on your needs.

Removing the drive and installing to a new drive and then re-adding the additional drive can cause issues. You will need to make sure to set the boot priority in the BIOS in order to select the right drive first.

In addition 32bit editions of windows do not support more than 3gb of ram. You have a 64 bit processor, so if possible I would install the 64 bit operating system. It will not affect the ability to dual boot, and it will give you access to all of the memory space for both your processor and your ram. It may even give you an overall system performance boost.

On to licensing:
Microsoft requires a computer purchased from a store to be upgraded using the retail version of windows. It is against the terms and conditions to install an OEM version of windows on a non-newly built machine.

Just my two cents, have a wonderful day.

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