Windows stuck at a reboot loop after Update

Hi!

My brother's laptop has Windows 7 Ultimate 64-bit installed. Yesterday Windows installed a lot of updates and asked for the usual restart to complete them. Computer was rebooted and ever since it's stuck at the blue Welcome screen. "Configuring updates, do not turn off your computer" this is the last thing you see for 1-2 minutes then it reboots automatically.
My first thought was that System Restore is gonna solve this, as it has helped me in the past too.
The problem is, of course, that Windows cannot complete the boot, so the usual "type cmd in the search bar" doesn't work. I've tried "Safe boot with command prompt", it cannot complete boot either.
I've tried with a Windws 7 (Prof 64bit) install DVD, I clicked on the System Restore and it gave me an error message: specify operating system! reboot and choose an operating system". I don't even understand, it only has one op. system installed.
Also, aut. repair gave me another error message that this installation disc is not compatible with the Windows the computer has installed. This could be the problem??
If I download the same version (Ultimate 64-bit), make a bootable pendrive and try restoring with that, it's gonna work? This is what I hope, otherwise I'm out of ideas. Obviously, the quickest and most simple way would be a clean install (but there's only one drive, with a lot of personal data, so those would be lost).

Any idea guys???

Thanks!

By the way, do you guys think it can be HDD failure? I say this because when the computer is on, the hard drive is constantly crackling and rattling (if these are the right words).
Also, the system is incredibly slow, boot is 3-4 minutes and programs start up extremely slowly (especially compared to my SSD system).

I told him the best solution is to move the files to an external hard drive (and buy a new one); not to wait until it completely crashes and all the data is lost.