"Setup was unable create a new system partition" error installing Win7

Have you ever used this disk before? If you did, was there an OS installed on it or you just used it for data? From your post it sounds like you have never used it before, just making sure…

You may want to perform a secure erase in any case. Also, some EFI BIOS have an option to boot from a CD/DVD drive in EFI mode. Make sure you do NOT use that option. This creates all kind of problems during installs. Use legacy CD/DVD mode.