Presuming you have:
Win7 default IIS setup ( you haven't changed the DefaultAppPool)
SQL 2005/2008 installed
ASPNET 3.5SP1 is installed
You are NOT running in a web farm configuration
Unpack DNN installation into a separate named folder
Permission the folder:
Network Services needs Modify; Read&Execute; List folder contents; Read; Write permissions
IIS_USRS need Read&Execute; List folder contents; Read permissions
In IIS Manager expand the "Sites" node and right click on "Default Web Site" select "Add an Application"
Give the site an "alias" this is what you will type in for http://localhost/> EG: http://localhost/CE514
Click the [...] a browse box will appear. browse to the drive/partition where you unpacked DNN and select your DNN folder
Click OK
If you are using SQL Express you're done
if you are using SQL Server you need to just add a database to SQL AND add Network Service account as db Owner
Open a browser, type in http://localhost/>
Installation begins
You have 3 choices - Auto is the quickest and provides you with plain jane defaults
Typical - you need to name the Host and Admin accounts and you can setup a mail account as well.
Custom - Host/Admin/mail needs to be setup and you have the opportunity to add modules/extensions during the installation
If using SQL Express just breeze through the database screen it will default to .\SQL Express and use the database in the App_Data folder
If you are using SQL Server click the radio button on the top right for SQL Server 2005\2008
Enter your database name and either (local) or the machine\server name
Test the database connection... will pass for SQL Express *should* pass for SQL Server depending on if you add the correct permissions....
Once the install wizard finishes click "Go to my site"
Review these 2 blogs for changes to IIS Default Identity Network Service is no longer the default service account on Win7/IIS 7.5:
http://www.dotnetnuke.com/Community/Blogs/tabid/825/EntryId/2420/Windows-7-Windows-2008-R2-cross-application-pool-isolation.aspx
http://www.dotnetnuke.com/Community/Blogs/tabid/825/EntryId/2510/Setting-up-Your-DotNetNuke-reg-Development-Environment-on-Windows-7-using-IIS.aspx