Spurred on my Roberts post I thought I would explain how to delete the windows.old folder in windows 7 as the KB article he discusses is for Windows Vista:
Open Disk Cleanup by clicking the Start button . In the search box, type Disk Cleanup, and then, in the list of results, click Disk Cleanup.
If you're prompted to choose a drive, click the drive you just installed Windows on, and then click OK.
In the Disk Cleanup dialog box, on the Disk Cleanup tab, click Clean up system files.
If you're again prompted to choose a drive, click the drive you just installed Windows on, and then click OK.
Select the Previous Windows installation(s) check box, and any other check boxes for the files you want to delete, and then click OK.
In the message that appears, click Delete Files.
and do heed the warning:
“Before you use Disk Cleanup, make sure that all of your files and settings are in Windows 7 where you expect them to be. Deleting the Windows.old folder can’t be undone.”