Well, does your old machine have at least an i3 CPU, 4GB RAM, and 320GB HD? Because if not, even if you manage to get W7 installed, it’ll run so slow (if it runs at all), that the upgrade will have been pointless.
Your other issue is finding drivers. If your PC is really old, you’ll have a hard time in finding W7 drivers for it, or not find them at all. In any case, you won’t find vendor support, but will have to go to blogs and chip makers to find the drivers.
And yes, you must do a clean install, meaning copy off data first, then recopy data on and reinstall all programs from scratch.
You’d be WAY better off to buy a new Windows 7 Pro x64 Dell Optiplex 3020 with 3-yr Dell factory warranty for $640.00, especially when you consider the cost of retail W7 and any other hardware upgrades you’re considering:
Will likely go the new box route, no patience to chase down new drivers and what not.