In order to install Internet Explorer 7 Beta 2 Preview you must be running Windows XP with Service Pack 2. Those running any other operating system, including Windows XP with Service Pack 1, are not eligible for the upgrade...if you don't meet the requirements it will refuse to install. When the release version comes out the requirements will be Windows XP w/ SP2, Windows XP Professional x64, or Windows Server 2003. Thus, if you want to move up to IE7 you'll have to do the same with SP2 first.

Hope this helps,
John