Okay, so it sounds like you just screwed up Windows, everything else should be fine. I'm pretty sure that BIOS only has boot options listed by their location, not the partitions and whatever else, so I don't think that would help to go screwing around with it. Try the first option first. ONLY if it doesn't work, read through the second and third options if you want to try either of them. I'd suggest you try the third option before you do the second, because it would mean that you don't have to completely reinstall Windows.
1: The first option is to use your Win7 install disc or a recovery disc to fix Windows. I'm not familiar with the Win7 disc, but there should be several options, one of which is something to the tune of "my Windows won't start up", which starts an automatic thing that checks for problems. If that doesn't work, go to the command prompt option and type "fixmbr" (without the quotations, obviously), which might fix it. This wouldn't fix the C/D thing, but it'd at least make your computer work again.
2: The HDD isn't damaged so you can probably just install Linux. Then through that you can access all your crap and back it up somewhere else like an external HDD or a third FAT partition. I say FAT because both Windows AND Linux have perfect support for it. Linux has poor support for NTFS partitions, which Windows uses. After that, you'd delete both the Windows partitions and basically just reinstall Windows on those.
3: Now, there is a third option which MIGHT work, but you'd probably want to back up your crap first, just in case. Basically, it'd combine both of the above. First you would install Linux and back your crap up. Then you'd move everything on the "D" partition to the C partition. After that, you could delete the D partition entirely, then insert your Windows disc and pretty much follow the instructions of the first step up there. This would not only get your Windows working in the first place, but it would combine the C and D partitions and remove that C/D "confusion" you had.
By the way, if your Linux disc doesn't work, be sure you burned the files on the disc correctly. An ISO as I understand it is basically like an archive, so you want the files IN it to be on the disc, not the file itself. So if you open the disc on another computer, you should see a bunch of files and such on it, instead of a single ISO file.