You keep forgetting to format. When you select the drive a option highlights. It is Advanced. Click that. It will give you the option to format the drive.
Remember you need at LEAST 20GB of space to install Vista.
Mak....you made my day with this answer. I looked everywhere for a solution and this one worked like a champ. Thank you so much. There is nothing more frustrating than getting an undefined error. Especially a Microsoft error that they don't document on their support pages. You rock!!