It sounds like you're trying to install Windows 7 on the spare hard drive, correct?
If so, start Ubuntu with the spare drive attached and open gparted. Use gparted to remove all partitions from the extra drive (assuming that there is nothing on that drive that you want to keep - if there is data you want to keep, back up the drive first). Make sure you choose the correct drive in gparted or you could wipe out your Ubuntu installation.
Once you've removed all partitions from the spare drive, reboot try to install Windows 7 again.