MBR and GPT are two entirely different partitioning systems. Your disk can use one or the other but not both. (Unless you use the ugly, standards-violating, and dangerous "hybrid MBR" that Apple adopted. Let's not go there.)
Modern hardware supports two boot modes: BIOS/legacy/CSM and EFI/UEFI. In BIOS mode, the computer looks just like an old-style computer with an old-style BIOS firmware. When booted in this way, Windows will install only to an MBR disk; if you feed it a GPT disk, Windows chokes and gives you the error you report. There's nothing wrong with your disk in this case; it's a mismatch between the boot mode and the partition table type.
If you boot Windows in EFI mode, by contrast, it will install only to a GPT disk. If you feed it an MBR disk, it spits out an error message complaining about the disk. Again, there's nothing wrong with the disk; it's just that the boot mode is mis-matched to the disk's partition table.
Thus, my suspicion is that this has happened to you:
- You installed Windows in EFI mode. When it partitioned the empty disk, it created a GPT and set everything up.
- You've now booted the installer again, but you've done something subtly different to cause it to boot in BIOS/legacy/CSM mode. It's now seeing the GPT disk and throwing a fit that only an expert can understand.
Another possibility is that you originally installed in BIOS mode but you've accidentally converted the disk from MBR to GPT. The symptom would be identical.
If my first suspicion is correct, or even if the second possibility is correct and your computer is EFI-capable, your best bet is to figure out how to boot the Windows installer in EFI mode. You should then be able to proceed with the installation without trouble. On EFI-capable computers, you can usually select the boot mode by hitting a function key soon after powering on. Unfortunately, which key varies from one computer to another; check your manual, look for on-screen prompts, or try them all. You'll then usually see a list of boot options, one of which will boot your optical disc or USB flash drive in BIOS/legacy/CSM mode and the other of which will boot in EFI/UEFI mode. You might also be able to set or disable options in the main firmware setup screen. Also, if you're using a different medium for this installation than you did for the previous one, try switching back to the one you used before -- some Windows 7 installation media seem to have problems booting in EFI mode on at least some computers.
Another option is to completely delete the partition table on the disk -- note that I'm advising deleting the partition table, not just all the partitions. There are numerous tools that will do this, but I'm not sure what to suggest to use within Windows, since I'm more of a Linux person myself. Also, this approach will render all your partitions inaccessible, which is obviously something you should not do if you've got any data you want to preserve on the disk. A variant of this approach is to convert the disk from GPT to MBR form. My GPT fdisk (gdisk) utility can do this, although there are some caveats -- see the Converting to or from GPT page of its documentation.
