HD crashed...how do I get running again?

This was a slow motion crash. In Nov 2011 my HP Pavilion, 64-bit, Win 7 Home Premium, desktop (pretty powerful machine back in 2007) started warning me the HD was going south. I immediately made an image of the drive on another drive. I made a total of three images on that drive. Confident that I had that under control I continued to use the crashing drive until if finally would not boot anymore. That was about a month ago.

Bought a new drive and installed it. I asked around if any of my friends had a spare, unused Win 7 disk lying around - got one for Win 7 Ultimate. It is labeled "For distribution only with a new [not-my-brand-name] computer." It is also labeled "Recovery DVD-ROM for Windows 7 Ultimate."

I ran that and all was working great until my friend's HD crashed without warning. Then he installed the system from the same, previously unneeded disk. Now MS has determined that his computer has the real matching product key and mine is going to die in about a week.

Then I remembered buying a Win 7 32-bit upgrade disk for my daughter's 32-bit Vista computer back in 2009. She never wanted the upgrade so I tore the house apart. Found it! It is labeled "MS Windows 7 Professional 32-bit x86 Upgrade Pre-existing OS License Required (Product Key Required)" The product key is on the sticker on the back of the DVD holder.

I realize I'm installing 32-bit OS on a 64-bit computer. I'm also trying to save a few bucks on this old equipment. I tried installing the 32-bit Win 7 using a Custom install to replace the Win 7 Ultimate. That seemed like it was working but it does not recognize the product key. Message says it is not a valid product key.

Then I tried to recover the images I made last year. Those aren't working either. They are 64-bit images. In the middle of the attempt to recover those, I get a cryptic error message with a code starting with 0x800..... End of attempts.

This has been a very good box. With what I have, is there a way to get it running again? Or do I need to bite the bullet and buy a fresh, 64-bit, Win-7 DVD? Ideally I'd like to restore the year-old image. What are my options?

And why would you use any other license than the one which came with the HP and is valid for the life of the machine to reinstall as often and in any way you wish, in 32- or 64-bit?

Everything you need including the installer is here to Clean Reinstall - Factory OEM Windows 7

Follow the steps in the tutorial to get and maintain a perfect reinstall. Keep us posted how it goes.

There were enough hints and clues in the previous messages for me to find this tutorial on recovering the image.

System Image Recovery

I did that yesterday and it seems to be working. Of course I needed to update everything from last November, but that's trivial compared to reinstalling everything again. Seems like some programs need to be reinitialized - Windows Media Center for example. Again, no big deal. And there are a lot of Windows updates since November.

That computer is my weekend computer at my weekend home. Yesterday was a fluke that I was there. I'll be back to continue checking it for anomalies on Friday.