yes you generally need the drive "prepared before you use it, but windows install can generally do it for you anyway.
as for installing and activating, make sure the SSD is set as the first hard drive on the boot list before installing (or it will call the startup info from a standard drive slowing startup) I would also strongly advise disconnecting the old hard drive if you want to leave the old install intact to swap some stuff over, or you will end up with 2 windows 7 options on the startup screen with no way to tell the one that is on the SSD without going into windows. (also saves messing with MSconfig/boot.ini to make the PC auto boot into the new install) activating should be fine as the hardware is the same other than the new hard drive and the activation mainly latches onto the motherboard.
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