1 you cannot instigate an upgrade from windows XP to windows 7 ,it wont work ,microsoft know this and there are several tutorials on how to do a full install using the same (backup) disk.google it .
the reason that you cannot delete C is that the boot files are stored there, and windows 7 management will not allow deletion of that partition .
the first thing to do is back up (to dvd /external drive etc.) any important files from your XP (C) drive ,make sure you include things like address book favorites etc. then restart your pc with the installation disc in and choose full install (not upgrade). and chhose custom ,that will give you the option to select where you want to install (c) .
sound card drivers and printer/scanner drivers are often needed even after installing windows 7 .
download a neat little program called belarc advisor ,it wil run on your pc and give you a lot of useful information including your motherboard model number etc ,visit either the motherboard manufacturer and look up your model ,to see if new drivers are available for your hardware.