If you install 7 on a machine currently running XP (as a replacement for XP) three options are available:
Erase everything and install anew;
Install to a different partition or disk from XP;
Install to the same partition as XP but place the old XP install (along with its Program Files and Users directories) into a subdirectory named Windows.old.
The first option is the most hassle, and may well not even be a requirement if you have enough space elsewhere on the system. If you do, then you can go with option #2 -- essentially, a dual-boot arrangement, with Windows 7's boot loader taking over for the XP boot loader but allowing you to boot either OS interchangeably. This option is the safest in terms of preserving your old setup, since it's still available and running.
Option #3 works best if you have the space on your native Windows drive for another OS install; the Windows 7 installer will tell you if there's enough room available to do this. Once 7 is set up, you can copy your user data and delete the Windows.old directory at your leisure.
Windows Easy Transfer
Most people moving from XP to Windows 7 won't buy a copy of the OS -- they'll be getting a whole new system with Windows 7 preinstalled on it, and migrating their data and apps. With each copy of Windows shipped is included a utility that streamlines the process of moving personal data from one PC to another: the Windows Easy Transfer tool, which is used on both the old and new machines to migrate your user data and documents.
A copy of Windows Easy Transfer is in the \support\migwiz directory on the Windows 7 installation DVD. Pop the DVD into your old PC, run migwiz.exe, and follow the prompts. The migration can be accomplished across a network (probably your best option), by using a USB Easy Transfer Cable (if you have one), or by using a hard drive or USB drive to store the data to be migrated.
Note that Easy Transfer can also be used if you're installing Windows 7 on the same machine -- you'd save the data to a disk first (either a hard drive or USB drive), install Windows 7, and then perform the data-restore operation on the same machine. Moving Applications
One thing Windows Easy Transfer does not handle is moving applications between instances of Windows. An app of the scope and size of, say, Microsoft Office can't be simply relocated to another computer by copying folders -- it has to be installed from the original discs, not to mention registered to that PC.
Take an inventory of what's installed so you'll know what to reinstall when you have your Windows 7 machine up and running. A quick way to do this is with NirSoft's MyUninstaller, a freeware utility which lets you dump out a complete list of all formally installed applications to a text, XML or HTML file. This gives you a manifest to follow when you want to reinstall what's needed. If you can't remember product keys for Office and the like, the same fellow's also written a tool to dump product keys for many common MS applications.
Another thing to keep in mind is applications that aren't formally installed, but are on the computer anyway -- like the PortableApps collection of programs. These can be moved by hand by simply copying folders, but probably won't show up in the above inventory, so be mindful of them when you do.
Finally, another thing that doesn't tend to get migrated automatically is fonts. If you're like me, you've probably built up quite a collection of free and for-pay fonts over the years, and the last thing you want is to have them disappear because you left them behind. Go into the Fonts folder on your XP installation and copy everything there to somewhere safe before doing the migration.
Test Hardware
If you're migrating peripherals from your old Windows XP system, take the time to make sure they're still supported in Windows 7. Odds are they should be: just about any peripheral that works with XP should work in Windows 7 as-is, with little or no tweaking.
One thing to be wary of is 32/64-bit compatibility. Some devices that have 32-bit device drivers don't have a corresponding 64-bit driver, and won't work in the 64-bit edition of Windows. Printers and scanners (especially multifunction devices) are two of the most common culprits in this regard; hard drives or displays should be okay. If you're already running the 64-bit version of XP and everything works, then you can rest easy.
Conclusions: A Good Home For An Old PC
Once you're finished with your XP machine, what then? Don't put it out on the curb and let it go into a landfill, whatever you do. It may not be state-of-the-art anymore -- but for people with minimal needs, a computer is a computer.
If the existing hard drive is antiquated, replace it -- something you can typically accomplish for about $50 or so -- and you can generally boost the speed of the machine a fair amount. Throw in a collection of free applications, or replace Windows entirely with a Linux distribution if the recipient is inclined. XP may be on the way out, but that's no reason someone else can't make the most of it for a little while to come.


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