site-install error: /var/www/drupal7 does not contain a valid installation
The Documentation shows the steps you should do are:


Start with empty directory and prepared empty database (or user with permission to create database)
drush dl drupal --drupal-project-rename=example
cd example
drush site-install standard --db-url='mysql://[db_user]:[db_pass]@localhost/[db_name]' --site-name=Example


You should not manually create, copy, move config files before executing drush site-install. And you should not use aliases like @drupal7 unless they are defined. In case of installation, I always set up site first, and aliass for it later, and it worked all right.