How do I get rid of this old hard drive in my machine?

Chances are that the boot sector is on the drive. Pop that drive out, pop in your windows 7 DVD or recovery disk, and select system recovery, and the startup repair mode to fix it. If that works, then you can nuke the old hard drive

When you pop in your windows 7 dvd and enter recovery mode.

You will want to run the following cmd on the cli:

fdisk /mbr

That will fix the 'master boot record' of the current drive and will make it bootable according to windows standards.