Okay we are getting this way to confused. Get GParted.
Mirrors
Download and burn the ISO with ImgBurn:
Burning ISO Images with ImgBurn - Guides - NeoSmart Technologies Wiki
Frm there load up GParted with the CD in your tray. It is a bootable D. From there select the partition you want to install to. Right click on that partiiton and you will see the format option. Choose the NTFS option and format the drive. Then restart with the Vista DVD in the Tray.
Go thru the boot process. It should now work.
The issue you are having is related to teh format. Vista does not do a full format it does jsut a quick where it erases teh data. The problem is that you have a corrupted spot on teh hard drive which is causing this issue.
Doing this will get rid of that spot and allow for a install to complete.