What do you think of the reply and do you think he is interested in me and my application? Recently i have been applying to various Ph.D. programs and i have approached many professors as my potential supervisors and among those, i applied to Harvard and this is what the Director of the Program in one of the Ph.d programs there replied:

" Thank you for your email and your interest in our lab.
To answer some of your questions, I do think that you would be a great fit both for ### and for our lab. Also, we will be taking new graduate students next year. 
As you probably know, we do not admit students directly into any one lab, but there is an admissions committee that decides on the students.
 Once you are admitted to ###, then I would be happy to talk about a rotation in our lab, etc. "

So what do you think are my chances of getting accepted and how should i further proceed with the conversation.
It's a completely neutral reply. I write these emails to qualified candidates about once a week myself. It is, in essence saying: "You've contacted the wrong guy. I'm not making the decision about admission. We'll talk again if and once you've been accepted and here."

In other words, I don't think you can draw any kind of inference from the email -- neither positive nor negative.