When running through the install screens you should get to one that, assuming the HDD isn't new, shows a few already configured partitions. Delete all of them and then just click next until Windows gets installed. Hopefully Windows 7 is smart enough to identify the drivers for all of the hardware in your PC. You should check Device Manager for any yellow "?" which indicates drivers you may need to locate and install manually. This ain't Windows 10/11 unfortunately. If you went with XP it's even more effort! As for HDD's, just use a single partition for the OS. I capture to C:\temp (XP) with
VirtualDub 1.9.11 with no problems at all although I do copy off to a pair of drives for moving to W10 for processing and a 2nd backup copy. I'd network XP but SMB1 isn't secure and moving the drives isn't a big deal.
One more comment... I tried Windows 10 and 11 and had varying results with different capture cards. Eventually I went back to XP for capture and basic
VirtualDub clipping and lossless compressing (old Lenovo T500 Core 2 Duo P8600 laptop). Copy the avi's from XP to the external USB HDD's and process on W10 (Lenovo Yoga T380 i7 laptop running VirtualDub2, AVIsynth or Hybrid). FWIW, I still have a ton to learn but every day is an adventure!