I don't fully understand what that's saying.
In the Partition tab, select the default options: a GUID partition table with one data volume in Mac OS Extended (Journaled) format. This operation will permanently remove all existing data on the drive.
After partitioning, quit Disk Utility and run the OS X Installer.
This is exactly what I've done, I spent that last 24 hours waiting for it do a 7 pass erase then then I tried the OS X installer, and that's the stage I'm at now, with it asking for an itunes log in. So I've put my details in, and I'll see how much of my data was automatically installed this time.