Please post up a screenshot of the error message (or type it out verbatim) received when you try to System Restore.
Next try John and Archie's suggestion to use System Recovery Options
If these fail try running SFC -SCANNOW Command
to repair any damaged System files. It may need to be run three times if it finds problems.
Next I would consider a Repair Install
using an installer w/SP1 if you have it. Let us know if you need one.
If all fails, I would turn off System Restore then after reboots turn it back on to flush the SysVolInfo file, but this will lose all of your Restore points so I list it last after more non-destructive steps. I also set all installs to use up to 20% of HD for Restore points so they will last longer: System Protection - Change Disk Space Usage
Tips for getting a perfect reinstall of Win7: Reinstalling Windows 7