You do need a copy of Windows 7 beta release.
And you only use the command line utility in Windows... (cmd.exe)
This way I described copy all files i a correct way to your harddrive, and you do the upgrade from there.
But this is not a way to do the installation, if I can recommend something... It takes a very long time to upgrade the system from 6801 to beta and not every program works. I think it will be better i you make a backup of all the files you need with Windows 7 backup system and then do a fresh install of the system.
It took me 25 minutes do do a full system install from the files on the harddrive, and 3,5 hour to do the upgrade and still needed to reinstall most of the software.
So, do a fresh install and then you have the backuped files... p.o.c
Hope you can understand what I meen because english is not my native language.
Is there any particular reason why you would want to upgrade rather then do a clean install? Clean install is a much better idea in general but especially when going from a pre-beta to a beta release.. Not to mention clean installs of Windows 7 take about 20 mins on a fairly modern system.. upgrades take about 30-40 mins...