Setup was unable to create a new system partition or locate an existing system partition

As part of trying to recover data from a Novell NSS partition we attempted to install Windows 7 onto a brand new disk so we could run some recovery tools. During the install at the disk selection part we got the error in the title of this post. It took me awhile to figure it out but the resolution ended up being very simple. We had 2 raid controllers plugged in that once we unplugged the system was able to create the partition. It was a bit odd since the install did not even see these disks but it worked.

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