Vista has installed sucessfully. I have managed to get the default image down to 4.96 GB. You can make it even smaller by removing the SP1 uninstall files by running VSP1CLN.exe. This will free up another 800mb. Vista is using less space than Dells default XP install.
Once Vista has been installed you will notice that there are a few drivers missing. Before I did anything I installed the Dell 910 chipset drivers for Vista and rebooted. This next step is where the folder you saved from the XP image comes into play. Right click your devices even if Vista has detected them and installed default drivers, select update and then choose to search for the driver manually, when you are promted to choose a path select the drivers folder and it will go though and update the devices.