This error message occurs if you try to install Windows 7 on a Windows 8 device using Windows 7 recovery media. As result of this problem the downgrade is not possible.
If the laptop was preinstalled with Windows 8, some steps would need to be followed to prepare the device for a downgrade to Windows 7.
1. Changes in the UEFI firmware.
2. Boot a Windows 7 recovery media.
3. Change manually the partition table.
So, how to fix this? ... To downgrade to Windows 7 on a computer preinstalled with Windows 8, using a Windows 7 recovery media, follow these steps:
1. Turn on the laptop and press F2 to get into BIOS.
2. Next go to the “Security” tab and disable “Safe Boot”.
3. Now go to the “Advanced” tab, then select “System Configuration” and change the "boot mode" from “UEFI” to “CSM”.
4. Once you have done that, press F10 to save the changes and exit.
5. Now you want to boot the computer from your recovery media (Press F12 on bootup to boot from USB/CD/DVD media).
6. At the first screen prompt during the recovery process, double click on the top left hand corner, to open a command prompt.
7. At the command prompt type in the following 4 commands:
Select disk 0
8. Once it has exited Diskpart, type “exit” again, to exit out of command prompt.
9. Now just follow recovery screen prompts.
"Clean" is the answer. Thank you! Wiped the partitions in diskpart, but that was not enough.
For those having the same issue you may also have to do this to get the command prompt to appear. In my case, using a Toshiba Qosmio laptop, I would have to hit F8 repeatedly when the USB drive would start booting to get the Windows boot menu and go to "safe mode with command prompt". Once booted you still are presented with the Toshiba recovery menu. Move your mouse cursor to the very top left corner of the screen and double click. The command prompt should appear over the Toshiba recovery menu and from there you can run diskpart.