Hello,
I also ran into this issue... the fix is simple:
In your bios disable the floppy drive support (most likely on the main screen).
It appears that since we don't have floppy drives anymore, but the bios has it listed as being there, the win 7 installer does something weird... once I disabled my phantom floppy drive the install was very fast and without error.
sorry just re-read your post and it says you already tried this... make sure you do it on the main bios screen... where all the drives are listed... you will see floppy set to 1.4, just change that location to disabled.