Windows 7: Used laptop from pawnshop. Win7 not genuine. installation help and ?

So we got a laptop from a pawnshop that is labeled WinXP. But has Windows 7 installed. Several months back we had bought one with the same set up - original XP unit with Windows 7 installed.
However now we have "this copy of Windows 7 is not genuine" error. First with "your trial period has expired".
So I understand I need to buy a genuine copy but what are my option and what must I do first?
Should I buy a downloadable copy only? Or a NIB from a box store? I have concerns about not having a disc.

When I do go to install, what do I need to do so that nothing is lost from this laptop. Very little is on it. Mostly just some pics and his favorites (which are few). It is my husband's learning laptop.

Sorry I don't have specs right now. It is at home and I at work. It is an HP that is quite bulky with Altec Lansing speakers on the front. A widescreen about 17" with the tenkey next to the keyboard.

Any advise is greatly appreciated.

this would be the best deal if you have XP or Vista on the other machines
http://www.amazon.com/Microsoft-Wind...6397106&sr=8-3

This pack was available last year for $120 so this price isn't too bad for 3 licenses (one key for use on up to 3 machines and comes with 32bit and 64bit media).
I used this pack to upgrade a pair of my friends machines last year.

Go with the box set, than you clean install:
Clean Install Windows 7
or
Product Key Number - Change

so just buy the disc and it will install over the current version?

Yes it will install over what you have, and the files you want to save just copy them to a USB stick or an external disk.

Thanks all. I was worried that it would be difficult for us IT challenged folks.

If you have an XP COA sticker on the machine then you qualify for Upgrade version whether it is installed or not. You could also reinstall XP with that Product Key if you wanted.

Just boot the Windows 7 installer, it will see any OS on the drive to allow use of Upgrade version key during install. Clean Install Windows 7