OK this is not that bad.
You'll need to bring up the command prompt booting from a Windows 7 disk and then type:
DISKPART
Next type LIST DISK
Now you need to select your disk, so type (providing disk 0 is the disk you want): SELECT DISK 0
Now list the volumes, so type: LIST PARTITION
DON'T FORMAT OR DELETE the RECOVERY partition (this should be the first partition in the list - it will tell you Recovery)
Example: Partition 1 Recovery 15 GB
The second partition in the list should be about 100 MB, so select it by typing: SELECT PARTITION 2
Now type: FORMAT FS=FAT32
Now select partition 3 (which is where you had Windows installed) by typing: SELECT PARTITION 3
Now type: FORMAT FS=NTFS
OK you're done. Now restart your Acer recovery process and you'll be fine.
I just finished doing this for a friend just now. No longer hangs during the Office 2010 stage