A complete, clean reinstall of Windows from a CD/DVD/USB will completely and irrevocably erase all data on the target hard drive. This includes the MBR.
Not quite. It will destroy the partition tables, create new ones and write new data to the disk. The old data still exists but it is not referenced anywhere on the disk.
The new installation will then start writing over the data that is not visible. The new installation will not be able to see any of the old data. Much data will be destroyed in the writing/installation process, but there will be many files that could be retrieved using applications like TestDisk.
The way to irretrievably destroy all the data (apart from physically destroying the disk) is to rewrite the disk with random data. A good example of an application that does this is DBAN.