Hi,
The problem is down to the fact that the original HDD in your notebook was 750Gb and you've replaced this with a 320Gb drive - Recovery Discs have problems when trying to install on a drive that's smaller in capacity than the drive they were created from.
There is an alternative option you could try.
First of all, be sure you can read and write down the 25 character activation key found on your COA Label.
Then, using another PC, download the Image file for Windows 7 Home Premium SP1 64bit. and save it to your Downloads folder.
When the download has completed, use a software such as ImgBurnto write the Windows Image File to a blank DVD - a guide on this can be found Here.
Once the installation disc has been created, tap away at the esc key as you start the notebook to enter the Start-up Menu. Insert the Installation DVD. Select the Boot Manager option ( f9 ). Use the arrow keys to highlight the CD/DVD drive and hit enter - if you're prompted to 'Press any key to continue.....', do so.
During the installation, enter Windows activation key when requested and when the installation has completed, use the 'Phone Method' detailed in the link below to activate the OS.
http://www.kodyaz.com/articles/how-to-activate-windows-7-by-phone.aspx
Additional software and drivers for your notebook can be foundHere.
Best regards,
DP-K