When you installed Ubuntu using WUBI, you created a "virtual partition" inside a 30GB file called root.disk inside a ntfs partition /dev/sda4 that has the mount point /host.
Trying to copy Ubuntu from the file inside /dev/sda4 it to the partition itself which may have unexpected results. As with all disk and partition manipulations make backups of all the data, particularly the Ubuntu home folder and generally everything else in the computer. If something goes wrong, you may have to start from scratch and reinstall Ubuntu.
Ubuntu should be installed in an ext4 formatted partition. Since currently /dev/sda4 is formatted ntfs, formatting it ext4 will result in loss of all the data including the root.disk file.
One solution may be to move the wubi installation to C:. This is not straight forward. See https://lists.ubuntu.com/archives/ubuntu-users/2011-October/253085.html for details.
Make sure that Ubuntu works after moving the WUBI files to another partition. If not, revert the changes.
Once wubi is moved to another partition, you should be able to format sda4 to ext4 and make the mount point "/."
If things go south you may have to install Ubuntu in its own partition from scratch. I would suggest deleting sda4 and sda5 make that unallocated space. Ubuntu installation should find the space and create the two partitions.
Alternately, select "Something else" as the type of install to format sda4 to ext4 and choose mount point "/" at the time of installation.
Keeping the same username in the new install as in the previous WUBI install will prevent problems with permissions of backed up files when they are restored.
