First a comment:
.. On OEM versions of windows 7. It is tied to the system that it was installed on. It is non transferable with one exception - If the system's Motherboard dies you may re-install on on new MB. You may, or may not have to call uSoft when you try to activate. When you first power up on the New MB it will most likely note a significate change of Hardware and require re-activation. Re-activation may, or may not fail with a notice to call microsoft. Simply changing the working MB for a new MB is normally not allowed for a OEM version.
.. Which ever method you use, FIRST create a image file of your C drive so that you have a point to come back to should you have problems. This is simple with windows 7. Just go to controll panel and select back up. This will create an image file of your "C" drive and offer to create a bootable restore DVD. Not, the image file can be placed on: (A) external HDD (Best option), (B) a set of DVD disk (usally 3 to 5), or A "Large" thumbdrive. ALSO as Adam pointed out backup all of the files/data that you have created and want to keep.
End of comments.
While AdrianPerry's method should/may work, I highly recommend using GeekApproved's method of a clean install as this will redo the registry preventing Potential problems with left over registry entrees that may cause problems (Simply deleting drivers does NOT always remove all entries). I normally use the "Custom" option and first delete all partitions, then repartition the drive using 100-> 200 Gigs for the operating system.
Added: I normally do NOT insert the Key during the installation process and wait until after windows has completed it's updates, I've reloaded all the new drivers, and made sure the new installation is stable - Then I activate.
In reference to creating a restore DVD, I normally do not - I use the "restore" funtion on a windows 7 installation disk ( Can Be ANY windows 7 installation disk, not just the one used to install the operating system.