"...can I expect it to boot up from the previous c drive although the m/b and cpu are new?"
Might do, but you'll only find out for sure when you actually try it. I've found that it can be hit & miss.
Regarding the fresh install with Win7 Upgrade, yes this is the ideal way to do it (backup your data prior to this though).
Yes, if using more than 4Gb RAM, a 64-bit OS is recommended. I find the majority of 32-bit software also works fine in 64-bit Win7 - they get installed in a different 'C:\Program Files (x86)' directory as well. If not, there are ways around it by using Microsoft's XP Mode in Win7 click here, which needs Pro version & above. But if your Win7 version is Home Premium, you can use other free third-party programs to use XP Mode (a few discussed in this recent thread click here). G