I have actually managed to install a working copy of Win7 in VMware on the same PC, but I booted the virtual machine from the .iso image instead of my physical DVD drive.
Same problem here. I had a working copy of XP x64. I downloaded the Win7 Enterprise x64 from MSDN, burned the .iso image to a blank DVD, rebooted the machine and installed from it. I selected custom installation, deleted the old partition and created a fresh one. It stuck at Expanding Files 0%...