Ddas, I followed all the step you posted but couldn't see the "...Previous Windows installation(s) in the 'Files to delete' list" as you've mentioned. I'm using Vista Home - does this make any difference? Thanks!
I have Vista Home premium which is the lowest end of the range I think and the procedure shown by ddas works for me. I just went to Accessories > System Tools > Disk Cleanup >
selected "Files from all users on this computer"
I selected the C drive to be cleaned up and previous windows installations showed up...was able to clean up sucessfully.
I managed to delete the windows.old folder which had like 36 GB !