How to remove the 100 MB system reserved partition when installing Windows 7

To summerize the steps:
  1. Let the installer create the system partition.
  2. Remove all other partitions (except for the 100MB system partition) if there're any.
  3. Extend the 100MB system partition to a size of your choice (eg. if you want to use this as the primary Windows partition, then resize it to at least 10-20GB).
  4. Optionally (if you still've any free space left) create as many partitions as you like (I used to have a 20GB partition for the system and the remaining space in one big partition for the user data ... however for users who store everything in their user profile folder, you might want to have only one big partition for both the system and user data).
  5. Proceed with the installation on the first (system) partition.