I decided to give it another try and after burning a CD-R from the same downloaded image, installation started without any problems.
Here's my feedback so far:
On the installer:
Out of 3 times I installed Alpha 4, once for whatever reason selecting boot loader screen jumped in front of the actual installation screen. I saw the selecting boot screed for a few seconds, with no options at all and a countdown to begin installation, just like on the installation screen. After that the installation started, and when it was done I got a message saying that there was an error selecting boot loader and I can either say Yes and continue or say No and try to correct the problem. I said No, and it went back to the installation screen with all the buttons disabled, so I can go neither back nor forward. The only option I had was to quit installation and start over.
Other than that, I love the new installer, especially the boot loader screen, since it gives a lot more options than the old text installer(I mean things like selecting which OS's it should include in the menu and the ability to change labels). Also it detected an Ubuntu install I have on one of my partitions, something that the old text installer could never do. The select partitions screen got my attention as well. Now I can set up mount points for all my partitions in the mount directory(like /mnt/sda1 and so) during the install, or even choose a different directory if I wanted to.
There is a little problem with that, though - when I click on selecting other mount point, I am given a small text field to enter where exactly I want to mount something. If instead I want to go back and let's say mount it to /home, when I click on /home I get and empty field. I don't know if it actually selects /home, but just doesn't show it, or if it just doesn't select anything. If I close that window and then open a new one by clicking on the partition name, then the menu is back to normal. Hope that makes any sence

Also there is another small problem - I can't drag scroll bars. If I press on scroll arrows, then the scrolling works fine. If I press on empty space between a scroll bar and a scroll arrow, the bar moves fine, but if I try to drag the bar, nothing happens.
And I couldn't figure out how to move in space invaders

Space bar for shooting works fine, but arrow keys don't move the guy.
Another thing, is it possible to add something like Super Mario or Crimson Fields to the installer game list, because the installation takes quite a while and the existing games(except maybe freecell) don't help too much.
Now for the Alpha 4 itself:
It is simply beautiful! I am not usually a big fan of eye candy, but compared with let's say VL5.9 with XFCE(that was the last time I used XFCE), well, there is really no comparison.
As for the bad stuff:
My wireless does not work. I can see the card is recognized with lspci. The right modules seems to be loaded, but wicd can't see my router.
It was a royal pain to get it working in VL6, so I was really hoping to avoid that with VL7. I'll look into it more and see if I can figure it out.
On the first install I forgot to mount my home partition, so when I've done it manually afterward and then rebooted, xfce wouldn't start saying that some file in my home directory was missing. Since it was a fresh install I didn't bother to save the home directory and it was overwritten when I mounted my home partition. This isn't really a problem, more like a word of caution. Also I *think* I could do that in earlier versions without much problem.
Also is there any way to include an option to install closed source nvidia drivers either during install or right after with vasm in the future releases? I think it would've been quite handy, since the desktop is kind of slow with the nv driver.
Another thing, are Suspend and Hibernate buttons in XFCE logout menu supposed to work, or is it still work in progress? Because here it says they are missing scripts or something like that.
Overall, I have a feeling that the final version will be amazingly awesome!
Thank you everyone who got VL7 up to where it stands right now for the amazing job you all did.
EDIT:
While trying to get my wireless card working, I realized that ifplugd is not installed by default(I can see it in the repo, but since I don't have an internet connection it doesn't help much). Is that an oversight or does VL7 use another program instead of ifplugd? I was going of
this tutorial, and although it's quite dated it helped me to get my wireless going with VL6.
EDIT2:
Another small thing, each time I log in, the mixer values are reset.
Also I have 2 cairo docks on startup.
EDIT3:
While watching video with gmplayer, screensaver came on.