In case somebody encounters the same problem, this is what I did to restore using Dell DataSafe Image Restore. This is ofcourse assuming that your recovery partition is untouched and undamaged.
1.) Downloaded and Installed my original OS version. Windows 7 Home Premium x64 in my case.
2.) Installed all necessary drivers
3.) Installed Dell DataSafe software.
4.) Made a backup using my USB Flash Drive.
5.) Restored using the bootable flash drive.
Problem over. Thanks for all the help. Do not rely on Dell's support even if they can help with basic stuff. They even tried to refer me to this website for help.