|"If you format the drive, the upgrade disk will not work"|
100% incorrect. Obviously you've never done it before.
"What is the best way to go? WIN 7,8 or 10? OEM or full price? Home or Pro version? (arrrgh!?)"
Why needlessly waste your money? Just wipe the drive & install Win7 using the upgrade disc but do NOT enter the product key. After it's installed, install it again but this time, enter the product key. The 1st installation will qualify as the "upgrade from" OS. I've done this before on several occasions & know that it works. After the 2nd installation is complete, you'll be all set. The installation is legal/genuine & will activate as it should. And then if you feel you must, you can upgrade Win7 to Win10 for free.
Don't believe me? Google it. There are plenty of sites that explain exactly how it's done. I already posted a link stating Microsoft is OK with it.
message edited by riider