"I have my windows OS disc. Can I do a reinstall on his PC using his license code?"
Possibly - in theory yes, but it depends on version and service pack status. The only way to know for certain is to try it. Most times it will work.
"Will the above partition prevent me from doing a reinstall?"
All drives have partitions - even if it's only a single one. You can scrub all partitions and start again with an "as-new" drive if you want. Killdisk will do that for you - or Seatools if it's a Seagate drive. Both free
Killdisk - click here
Seatools - click here
"Would he be better of installing a new HD and loading windows from that point? Would the PC allow this."
It's not necessary - see above - but he might want to for other reasons (capacity?)
All PCs can run multiple hard drives. Power supply capacity may be an issue when adding any extra parts. And of course you will need space to mount the drive in the cabinet!