Reference: http://windows.microsoft.com/en-us/windows7/how-do-i-remove-the-windows-old-folder
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Open Disk Cleanup by clicking the Start button
. In the search box, type Disk Cleanup, and then, in the list of results, click Disk Cleanup.
If you’re prompted to choose a drive, click the drive you just installed Windows on, and then click OK.
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In the Disk Cleanup dialog box, on the Disk Cleanup tab, click Clean up system files.
If you’re again prompted to choose a drive, click the drive you just installed Windows on, and then click OK.
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Select the Previous Windows installation(s) check box, and any other check boxes for the files you want to delete, and then click OK.
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In the message that appears, click Delete Files.
Remove Windows.old folder using Command Prompt
Run ‘Command Prompt’ as administrator.
First you will need to take ownership of this folder, so at the command prompt, type
takeown /F C:Windows.old* /R /A
Next, in the command prompt, type
cacls C:Windows.old*.* /T /grant administrators:F
When you run this command, administrators are granted full rights to all files and to all folders.
Finally, type
rmdir /S /Q C:Windows.old
This will delete the windows.old folder.