FYI, this is not a Windows 7 support forum. Since the SSD appears to work OK installing WinXP, according to your posting, then some kind of incompatibility with Win7 behaviour seems possible.
I see that you've posted exactly the same question on several other forums, which seem more suitable than this specialist data recovery forum (and you're not trying to do data recovery):
http://www.tomshardware.co.uk/forum/276 ... ot-installhttp://forums.cnet.com/7723-7591_102-547510.htmlhttp://www.techsupportforum.com/forums/ ... 13014.htmlhttp://forums.techguy.org/hardware/1027 ... after.htmlSo I wish you luck with your search, but I don't want to duplicate effort with all those other people, by getting too deep into this

Just FYI, Dell have released a f/w update to this drive, as sold in their systems. I didn't see any info about it causing a Win 7 "disk read error" message, but I saw mention of a rare data corruption isue, where the wear leveling process was buggy, resulting in the wrong data sometimes being read back afterwards.
If I was in your situation then one of several areas for further investigation would be to try to get more info out of Win7 than just "disk read error" (e.g. did it log anything to its event log? Does Win7 have any functionality to provide more info about that error?) so that you can see if there is always something common about the exact type of error, or location (LBA) of the error.
Of course trying to install Win7 on your SSD, but with that SSD is fitted into
other PCs, would help to eliminate something about your system as being the cause. Similarly, installing Win7 on
different SATA storage (HDD or SSD) in
your system, would help to show that your system is able to have Win7 installed successfully. Interpreting such test results is not always as easy as it may first appear, but this is unrelated to data recovery so is off-topic here.
Good luck!