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setup was unable to create a new system partition error while trying to install windows 7

At the very beginning of the install process, windows 7 rc 1 throws an error in the partition selection stage that it is unable to create a new partition.  No combination of deleting/formatting/etc of the partitions fixes the error.

In order to resolve the error, I restarted the machine and changed the boot order in the bios to boot directly from the future OS drive.   After that, windows 7 installed correctly.

Thanks to arstechnica for the fix.

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