Alternatively use Disk Utility and create a MSDOS (FAT) partition for the windows install.
Insert the Windows 7 DVD.
Restart while holding down c key to boot off install disk.
As mentioned make sure you select the correct partition
Install away!
Boot into Windows 7
Once done insert an OSX install disk (I believe it needs to be any Snow Leopard disk for Windows 7 but maybe Leopard is fine...).
Install the Boot Camp 3.0 drivers that show up on this disk under Windows.
Download and install Boot Camp update 3.1
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