One suggestion given to someone else who was having similar problems (though it did not fix it entirely for him) was to download swissknife program and format it that way to nfts. But as I'm looking at the partitions it looks like its already done correctly as far as I can tell, because as I click on each partition, at the bottom there is a little note if the install is not going to work on that partition. For example the first partition says the recommended free space for installation is 11752 MB. The last partition (MEDIADIRECT) says:
Windows cannot be installed on this hard disk space. Windows must be installed to a partition formatted as NTFS.
Then the middle partition (Disk 0 Partition 3) doesn't have any note and just tells you to click next. So I'm assuming that partition (which has plenty of space on it (136.5 GB) is the one that I use and is ready to go. Yet when I start to install it, during the Copying Windows phase at (0%) it comes up with the error message:
"Windows Setup could not reinitialize the deployment engine. To install Windows, restart the installation." But restarting the installation just gives the same results...