Blue screen and reboot on start up, Error 0x80070002

Computer has been running fine I believe an update happened because when I got home it was restarted and on the login screen which I would never leave it at and when it updates automatically that it usually the screen I see BUT I am not 100% sure that this happened. I hadn't done anything new to it for weeks either.

So, I come home today and when I turn on the beast it takes me to the 'System Recovery Options'

Which allows me to
- Startup Repair
- System Restore
- System Image Recovery
- Windows Memory Diagnostic
- Command Prompt

I tried all the options and I get this for an answer:
- Startup Repair
Startup Repair cannot repair this computer automatically
- System Restore
To use system restore, you must specify which windows installation to restore.

Restart this computer, select and operating system, and then select system restore
- System image recover
An internal error occured. The following information might helpyou resolve youre error:
The system cannot find the file specified. (0x80070002)

-
Windows cannot check for memory problems
an error is preventing Windowsfrom checking for memory problems during startup. To run the Windows Memory Diagnosis manually, book the computer from the Windows installition disc, and then slelect windows diagnostic from the Windows boot menu.

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I have the windows disc i set bios to boot for cd drive but it doesn't seem to work.

The only options upon boot are
1. Launch Startup Repair (recommended)
This takes you to the above part
2. Start Windows Normally
When i do this as soon as it gets past the windows load screen it instantly blue screens and restarts.

Please HELP! I don't want to loose any precious files!