Bootcamp not recognizing Vista DVD – can I install it from boot?

I ran Bootcamp last night and it set up a 100 GB partition for Vista. The problem is when I put in the Vista DVD Leopard won’t recognize it. However, when I restart my iMac and hold down the C key I am given the option of booting from the Vista DVD. Once I select this option Windows starts to install.

My questions is: if I go ahead and install Vista like this will it wipe over Leopard and my installed files or will Windows Vista just install itself in the 100GB partition?

What you're doing is fine. Once you get into the Vista setup process it will show a list of available partitions and let you select one. It won't just plough on over your OS X install.
Apple's guide to boot camp install is here for reference

HTH
mrplow