It's been a while and no one has offered an answer to this question other than to suggest performing an "upgrade install". I recently tried booting my Windows 7 (32 bit) install DVD and attempted to perform an "upgrade install" to a test installation of Windows 7 I had created on a another drive attached via eSATA.
When I tried to do this, the install process posted the message below.
The computer started using the Windows installation disc. Remove the Windows installation disc and restart your computer so that Windows starts normally. Then insert the Windows installation disc and restart the upgrade. (Do not select "Custom (advanced)" to perform an upgrade. "Custom (advanced)" installs a new copy of Windows and deletes your programs and settings.)
In other words, the Windows 7 install disc prevents performing an upgrade install if you booted from the install disc. It appears that the only way to perform an upgrade install is if you can start the install process from within the Windows 7 install which you wish to upgrade.
My question was whether it is possible to do a repair install ... not just a fix or tweak but an actual install ... of an existing Windows 7 installation which will not boot. It certainly appears to me that this is impossible.
Unless someone has something else to add I will probably accept this as the answer for this question in a day or two.