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Or will I need to format it again when installing?

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Just out of curiosity; why are you installing Server 2008 on a laptop? The answer below is correct, you cannot perform an "upgrade install" from Windows 7 to Server 2008. – akseli Nov 30 '10 at 14:42
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I don't believe so, since this is the "Server" edition of Windows. If you were running Windows Server 2003 then I could see this happening. You'll have to install from scratch.

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