A Microsoft spokesman stated: “If you’re running the Windows 7 RC, you’ll able to upgrade to Windows 7 RTM using an upgrade disk.” However, there’s a catch. While the Windows 7 installer won't overwrite your files, but your existing data are squirreled away in a folder labeled WINDOWS.OLD, which means that you won't be able to run most applications without reinstalling them. But at least you won't lose your documents in the upgrade process. But here's a bigger catch; While you won't need to downgrade from Windows 7 RC to Vista or XP in order to install Windows 7 final. But if for some reason you later need to reinstall the final version of Windows 7 from scratch using the upgrade copy, you'll first need to install and activate Windows XP, Vista, or Windows 7 RC. Becuase, Windows 7 upgrade disk will only work with an activated Windows version - before it will install the operating system, reported.