Trying to restore to factory settings.

I am selling my laptop and want to restore it back to factory settings. I have a Dell Inspiron mini 1012 running Win 7 starter 32 bit. The laptop works fine, no problems at all but again just want to restore it back.
In my manual it says 2 ways to restore to factory.

1) F8 then through the repair my console selection. ( I tried this and whenever I click on this selection it just loads windows normally. I am assuming this partition got messed up.)

2) By creating a USB or CD using the Dell Datasafe local backup program it came loaded with. THIS IS THE ONE i NEED HELP WITH.

I created the USB using the dell program and when I start my laptop and go to boot menu the computer recognizes the USB i created it on but then I get the all black WINDOWS BOOT MANAGER screen with the following


WINDOWS FAILED TO START. A RECENT HARDWARE OR SOFTWARE CHANGE MIGHT BE THE CAUSE.


1 INSERT DISC


2 CHECK LANGUAGE SETTINGS???


3 CLICK REPAIR COMPUTER


FILE: /WINDOWS/SYSTEM32/BOOT/WINLOAD.EXE


STATUS: 0xc000000d


Info: the selected entry could not be loaded because the app is missing or corrupt.




So what did I do wrong? Any help with this, I just bought the USB today and put it right in so unless I didn't do something right with that? Thanks

How to use Dell Recovery Partition,make Recovery Disks & how to order Recovery Disks.
Manuals | Dell US

RouteTo
Dell - Support

VistaKing- Yes I clicked f12 then the little +USB choice. It gave me the little white bar at the bottom of the screen just like it would normally when startup repair or restore would begin to load but then it loads really fast and gives me the all black Windows Boot Manager Screen as explained in the 1st post. So the USB I created starts to load but then just goes right to the error page.

FILE: /WINDOWS/SYSTEM32/BOOT/WINLOAD.EXE

STATUS: 0xc000000d

I plugged the USB and opened it, seems to have installed everything correctly from the Dell Datasafe recovery. Has about 5 different folders including a boot folder. So seems to have installed everything correctly on the USB just keep getting that error above when trying to boot into it?

theog- Again, I have the manual right in front of my face. I followed the directions on how to create a recovery usb through the Datasafe program that came installed with the laptop. But I am receiving the error I have been explaining everytime I try booting into the USB I created.

Greg- Thanks. I will now try the 3rd one and get back to you. F8 Does not work, I think the partition in the drive is either corrupt or got deleted. So not even trying with that anymore.

I looked on the bottom of my notebook and on the OEM product key it is Windows 7 Starter SNPC OA? What is the SNPC OA? Which OS am I looking to install that this OEM key will work with? Thanks

Indiana- Yes done everything he suggested. The recovery partition is no longer working on my drive. So am down to his last option just have to figure out which OEM install will work with my product key, I listed above this answer.