Formatting is not the same as wiping the drive... all it does is reset the drive's MBR partition table. Well, that is the quick format. A full? format does that plus scan the disk for errors. No actual file deletion is involved, just the losing of them. One of Setup's jobs is to find old installations, and it does not need the partition table for that. Looks like it found yours, and Setup will not overwrite it if it does find one, unless you force it to by deleting and creating a new installation partition.
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