When you're browsing into the files using Windows 7 DVD or Repair CD, did you see the file? So what happened when you rightclicked on it to Delete it? It should delete.
You can use the same method to copy out your files to another, HD external HD or USB flash stick.
Try also from Advanced Boot Options
Last Known Good Config. Then from disk System Recovery Options
run System Restore and Startup Repair. If these all fail after you make good (not sloppy) attempts to run them, try SFC /SCANNOW Run in Command Prompt at Boot