If you look at your “DISK 0” in DISK MANAGEMENT on Windows 7 you will see a hidden 100MB NTFS partition. This partition is created early in Windows 7 installation process and it contains Boot Loader and system tools.
The idea being that if the partition you are using for data and programs becomes corrupt or damaged your machine will still be able to boot up and you can use the tools to recover or repair the damaged partition.
If you are doing a FRESH install of Windows 7, you should delete ALL of the partitions on the disk in question, including the 100MB System Reserved partition. Windows 7 will create a fresh new 100MB partition automatically for you during the install process. However, if you are doing a repair or recovery, don’t touch it.
For more information you might find THIS blog helpful or the video below.