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Hello Fluidmotion,
A system repair disc is used to boot to system recovery options to help recover your Windows 7 installation if you don't have a Windows installation disc, can't find your Windows installation disc, or can't access the recovery options provided by your computer manufacturer.
A system repair disc is not able to install Windows 7.
Hope this helps,
Shawn
Yes, you want to keep the recovery partition as it contains the files to return your system to the factory state. Think of it as the manufacturer supplied backup.
Yes, if you would like to be able to do a factory recovery to be able to reinstall Windows 7 in the future.
A system repair disc is not the same as a factory recovery disc. A system repair disc does not install Windows 7. The links that I posted in my post above can give you more information on exactly what a system repair disc is and what it can be used for.