A [hopefully] quick installing/updating 10 recap since the deadline for the free upgrade is approaching [7/29/16?] & anyone running 10 will be required to upgrade [(re)install] the upcoming general release build.
[Personally I remain agnostic... Windows 10 is faster at some things, but only slightly for me. It is also less reliable than 7, so I'm in 7 most of the time. I'm also pragmatic, & have the impression that MS will force the issue, & I will have to move to 10, using it rather than 7 -- the question is how soon? I'm also ornery enough that I'll continue using 7 longer than MS would like, perhaps longer than would otherwise be practical, as push back to their attempts to force that move to 10. 10 does do a better job with devices with minimal hardware resources, like my mini-PC, but otherwise I won't say should or shouldn't -- it's entirely up to you.]
Installing 10 from setup files on a USB stick or DVD or having the files in a folder on the hard drive gives you a few options, like preserving software & settings or keeping nothing from the old install. Running setup in Windows [vs. booting to setup media] gives you a couple more options, but won't always work -- you may be told to use bootable media. If you clear the partitions on a disk before installing 10, setup will create new partitions, setting everything up, but the order that those partitions appear on the disk can & will vary. If you don't clear those partitions, or at least the Windows or system partition, the old copy of Windows together with at least some of the apps in the Program Files & program Files (x86) folders will be moved to a Windows.old folder. If your device has very little storage available, 10's setup can use a USB stick you've inserted for non-current files, though there's no way to switch this behavior on/off -- it uses it if it needs to.
The actual Windows 10 install or upgrade takes place without Windows running. If you upgrade 10 builds or run setup from Windows it'll get files ready on the Windows partition, then do the actual install when you restart or re-boot -- note that this is separate from a regular Windows restart, meaning that if you don't click the restart button in the Windows update or setup dialogs, a normal restart will not trigger the install or update, but bring you back right where you were in the install process [at least with older versions of 10].
Running Windows 10 setup from boot media can have a few more potential issues than running setup in Windows. For one thing during setup transferring files etc. from a USB stick can fail -- you may need to mount the ISO, & copy the files to a folder on the hard drive, running setup from there. Depending on your hardware, installing/upgrading via booting to a setup DVD may put your device into legacy bios mode, favoring MBR formatted hard drives, & more importantly, favoring using MBR boot files. Depending on your hardware, booting to USB instead you may have a choice, or it may favor UEFI bios mode, GPT hard drives, & GPT boot files. Potential issues are the same as for using any bootable media nowadays -- it may or may not work depending on your hardware & bios settings.
Side notes: Hard drives may be formatted for MBR or GPT. In actual day-to-day use you shouldn't see any difference between the 2. A Windows device will have a bios that basically ties the hardware components together, then reads the boot files off the selected drive to start the OS. A Pure UEFI bios will look for a GPT disk, a Pure legacy bios will look for MBR, but a great many bios are not pure but Hybrid, so can work with either. In UEFI mode the bios looks for the boot partition on a GPT drive which is always FAT32. UEFI mode may also trigger stuff like secure boot, compatibility functions etc. If the bios can handle it [I think most current can], a fresh Windows install may be a good time to turn on AHCI disk handling &/or switch from MBR to GPT formatted drives, but caution, doing either may deactivate any installed software including Windows. Switching from MBR to GPT requires adding boot files to the boot partition, which Windows setup will handle -- restoring a backup of another copy of Windows to a partition on the GPT disk should work fine, but you might have to reactivate that copy of Windows. Adding Windows drivers for AHCI disk handling is done by Windows setup -- you'll have to add those drivers yourself in any other copies of Windows however Before you make the switch [you can find directions of preparing different versions of Windows online]. With Windows 10, using a UEFI bios mode plus a GPT disk can mean Windows 10 modifying the bios settings, e.g. you may get a new entry in the boot device selection menu for the Windows 10 boot loader, & any other options *may* be removed.
If you upgrade to 10 or upgrade builds of 10 you'll get a new folder called $WINDOWS.~BT that includes Install.esd in the Sources folder -- this is the encrypted & compressed wim file that contains basically a complete image of Windows that will be setup for whatever device. That esd file can be turned into a regular or compressed wim file, or a ISO using a tool called esd-decrypter-wimlib that you can find online [AFAIK there is no dedicated web site], but it has to be run in 10 -- use 32 bit for a 32 bit ISO, 64 bit for a 64 bit ISO. You can copy that esd file somewhere else & use the tool to create an ISO etc., and if you do that when you get the restart prompt -- but don't restart -- you can get an ISO without going through the install process.
After Windows 10 is installed, to get rid of that $WINDOWS.~BT folder [if it exists], & the Windows.old folder [if it exists] use Windows Disk Cleanup --- right click the partition [drive letter] in Windows Explorer, select Properties, & you'll see the button for Disk Cleanup. You can also find it in Control Panel -> Admin Tools, & *maybe* in the Start Menu. When you run the tool you'll get a dialog with several choices, but you need to hit the button for system files, causing another disk scan, to get the full list. You can clear everything if you want, but be aware that once you remove the Windows.old folder you won't be able to roll back the installation to the prior copy/version of Windows [which may or may not work anyway]. You don't want to try removing those folders yourself manually, as it will seem to take forever as you spend a LOT of time changing ownership & permissions.
Sometimes Disk Cleanup will not remove the entire Windows.old folder -- to get rid of it then can be a BIG PITA. Depending on what's left, you usually have to go through changing ownership & permissions of the files & folders, sometimes individually for each file, & then you may find that you can't delete a file [or files] because 10 says it's in use. You can however usually rename them, which can be handy, because if after a restart you still can't delete a file(s) because it's in use, you have to boot to whatever bootable CD/DVD/USB stick & delete them there -- renaming long file names can be a blessing when you're deleting these files from a command prompt.
Windows 10 will install to an empty partition & be activated with a win7 or 8 key, or it *may* self activate, but what it needs to see for that to happen is unclear... there have long been reports that if 10 saw an activated copy of 7 or 8 it might self activate, if 10 is already activated on a device a 2nd copy might self activate, or you may need to enter a key, either during setup or once 10 is installed. If you're upgrading Windows 10 builds, sometimes stuff will break, so be prepared as possible, e.g. have your password handy in case your PIN no longer works. During setup you can skip checking for updates & you can skip setting up your Microsoft acct. etc., which can save a bit of time, & is handy when for example Wi-Fi doesn't yet work because you have to add drivers. Whatever you skip during setup you can do later.
Windows 10 will add & use new boot files & a new recovery environment -- that can make a difference if you're setting 10 up on a dual or multi-boot machine. If you have 7 & 10 for example, whichever you choose for the default in the boot menu, those are the boot files that will be used. The recovery environment can be a different story -- you may find that some of Windows 7 boot menu options [on the same page or menu as Safe Mode] no longer work. On a Windows 10 only device, it can be handy to run EasyBCD, adding a bogus item to the boot menu just so you see a boot menu, & thus can get to 10's different startup options, like Safe Mode. You can get to Safe Mode by shift clicking the restart button on the log-in screen, but if 10 won't get that far starting up, the boot menu option can save your ***. And you can always delete the extra boot menu entry later if you want.
Microsoft does have tools for setting up, installing 10, but they're not always easy to find, & often the documentation you can find is out of date &/or not complete. 10 on a GPT disk uses 4 partitions -- if you don't have Windows 10 setup routine create those, you can use Windows built-in DiskPart, which is a CLI [Command Line Interface] tool; you don't generally want to try this with a partitioning app. You can use the Windows CLI tool DISM to extract the files from an esd or wim image, or use that alone or combined with other tools to create a new image including for example software & drivers. You can apply that image [extract the files & copy them into place] to a partition, & you can create a partition image backup, restoring that backup wherever you want. Applying an image is faster & surer than running a setup routine, & if you apply an image from an install esd or wim, when you boot to it Windows setup will take over, setting up the drivers etc. so Windows will run. Note that if you apply an image using DISM, you have to separately set up the boot files using Windows BCDBoot.
Using DISM you can add the -Compact switch, which will cause some of the files in the Windows folder to be compressed, saving you a few GB of space. You can also apply the same thing after 10's installed, with more options, from 10's command prompt [Compact.exe]. You can find docs at microsoft[.]com to install just the parts of the AIK [Automated Installation Kit] to get WinPE & put it on a USB stick, CD/DVD, or VHD. TO find whatever it's often best to use Google restricted to microsoft[.]com rather than the site's built-in tool, e.g. aik site:microsoft[.]com [without [ ] ] starts a Google search for aik restricted to that site.
Do be very aware that this is the new Microsoft... They've made lots of changes, every one of them solely to benefit Microsoft. Problems in or with Windows 10 *may* get fixed with a hotfix or update, but most often they're stuck in a newer build -- you either wait for a new general release build, or join their Insider program to get a beta build. And Do be careful of those... Microsoft publishes lists of what new, what's fixed, & what's broken with each new build, but those lists are Very far from being all inclusive. They fix problems that aren't listed, include new stuff not listed, & most importantly, have problems that are not listed anywhere.
Those people who fixed stuff & made sure Windows & any updates worked are no longer employed at Microsoft -- it's a never finished product or project with anyone who writes Windows code responsible for QA for that code. Anything aimed at consumers that Microsoft says or publishes is basically an infomercial, & should be treated that way, e.g. as if it's some hawker at the fair or flea market. If you don't trust As Seen On TV products, don't take as gospel Anything Microsoft says, particularly about 10.
An example of what I feel is misleading... Microsoft made somewhat of a big deal about a *new tool* that would make it easier to clean install Windows 10, & they made this pitch to Insiders, as of course this is only in Insider builds today. B***S***. If you run Windows 10 setup while running Windows you have a few options, including keeping nothing from your current installation. If you use Windows Update to install that new build you don't see that dialog. With the new option Windows 10 can download the latest *available* ISO -- it may or may not be the latest build -- & run setup from the included files. The only thing new is the setting to download & run an ISO, though they don't tell you that, [mis]representing it as something else entirely.