Yes it is easy to install a harddrive.
Make sure your new one is set to Master, it will tell you how to do this on the harddrive, and just plug the cables into it, make sure the BIOS is set to boot from CD.DVD, put in your Windows disc and reboot, it will then install windows onto your new drive (make sure you do a full format while installing windows).
I would set the old 40gig to Slave, it will tell you how to do this on the drive.
This will then become D:/ drive
It should detect them automatically, if not go into the bios by hitting the DELETE button on your keyboard, and select Autodetect drives.