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When my bootcamp asks me to inset windows 7 install disk, do I need to purchase a physical install disk or do I need to just purchase a windows 7 copy online with a product key?

My Mac's Model is: MacBook Pro: (13-inch, Mid 2010) Processor: 2.66 GHz Intel Core 2 Duo Memory: 4 GB 1067 MHz DDR3 Graphics: NVIDIA GeForce 320M 256 MB

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No, there's no need to buy a physical install disk. You can certainly purchase Windows 7 online to get a product key. The ISO file containing Windows 7 can be downloaded from Microsofts web site, allowing you to install via BootCamp.

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Yes you do. Bootcamp is intended to give you the ability to have both Macintosh OS, and Windows OS on a single disk. This allows you to boot either Mac or Windows via holding option at boot up and selecting the disk. More specifically, Bootcamp is a partition type created to allow the major differences in disk formats between the two OS to cooperate on a single disk.

This doesn't give you free Windows. You need a copy of Windows, and a key to license the product.

edit: more info

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