Are you trying to setup a dual boot setup or just have Win 7? If it's a dual boot, what is installed on the other drive? If not, take that drive out of the system and try it with just the drive you want to install Win 7 on.
Did you try wiping the new drive completely and trying to install Win 7? I've always had better luck doing that.
Make sure any external drives are NOT connected.
Are you trying to install Win 7 64bit or 32bit?
How much ram is installed?
EXACTLY which WD drives are they?
What type of DVD drive are you using? SATA, IDE, or external USB? And are you trying to install from a DVD or a USB flash drive?
I've never ran into a problem installing ANY OS on any of the P35-DS3L's I've owned or worked on so I know that it WILL install on it.
You should click on the User CP at the top of this page, then scroll down the left side to the Add System link and enter in your system specs in as much detail as possible. By that I mean 2 x 2gig G.Skil PC2-8500 CL5 ram instead of 4 gig ram, etc. That way we have some idea of what we are dealing with. While you are at it, go to the Edit Your Details link, then scroll down towards the bottom and fill in the Where You Live with at least your country. It makes things so much easier when people know what country you are from when recommending products.