trying to dual boot kubuntu with windows 7

You should be able to move forward after choosing the Manual option by hitting Next, which should open a UI to do your own disk formatting.

Once there you should be able to create new partitions in the 'free space'.

If you can get that far, you have to decide how you want to partition the disk. Personally I use the following scheme which contains 4 separate partitions (ESP, /, swap, /home), but it really depends on how flexible you want to be. Note that this is for EFI machines, hence the ESP partition. If you have a BIOS machine, you can use a normal /boot partition which you can find tons of info about on the web:

Partition 1 - ESP: This is the EFI System Partition which holds the boot loader as well as any other bootup related files. It should be in a FAT format (I use FAT32). Look up what the recommended size should be for Kubuntu as I am not familiar.

Partition 2 - /: This is the root partition and should be mounted at the / directory. It is common to use the ext4 as the file system for this partition. This partition is the root of all other directories and will contain all of the OS files that are initially installed on your system as well as additional packages and applications you add later on. The size of this is up to you, but it is easy to find recommended sizes for your given OS. For example, my XFCE Debian system recommends 10GB.

Partition 3 - swap: This is the swap partition and is used when the system is out of use-able RAM. Initially it was common to make this partition 2x the amount of RAM you have, so if you have 2GB of RAM, make this partition 4GB. As RAM size goes up though, it becomes overkill to double it. On my system with 8GB of RAM, I use an 8GB swap space which should be plenty. You can find tons of info on recommended swap size on the web.

Partition 4 - /home: This is the home partition and should be mounted at /home. It can be used to hold all of the additional files you want to store (Photos, Docs, etc). It is common to use the ext4 as the file system for this partition. The size is really up to you. You can always shrink/grow any of these in the future, so dont go crazy deciding on sizes.

Note that the above partition scheme I mentioned is totally optional. Is is possible to have a single / partition and put everything there. Personally I do not like to, because if you ever want to reinstall or share your /home directory with another OS.. having it on its own partition makes it really simple.

You can also go the other direction and make even more partitions for /usr, /var, etc. I wont go into why you should or shouldnt do that here.

If you go with the Guided option, it appears as though it will attempt to format and use the entire disk, which is not what you want if you intend to preserve the Windows installation.