I ended up using Easeus Partition Master to free up 24GB and installed W7. It's funny how I had 60GB free before and with a new 25GB partition, I now have 54GB free. This must be the new math according to Microsoft.

And no I don't have product key. It asked for it, but I just hit NEXT and it installed fine. I have version 7077.
I have dual boot of W7 right now and XP. You manage to get a product key for W7? They stopped allowing download of w7 a few weeks ago along with product keys for it.