Before going further, run an extended hard drive test - hold the D key through powerup or press F12 at powerup to get the boot menu - then boot to the Dell diagnostics and run an extended hard drive test.

Installing 7 will have destroyed the boot menu.  You can still use the image but will need to do so in a different way:

http://smsoftdev-solutions.blogspot.com/2009/03/how-to-restore-dell-factory-image-when.html

It is not possible to use the factory recovery partition after upgrading to a diff OS. The only way to go back is to boot to the installation disk and reinstall from scratch. There should be a way to correct corrupt profiles without doing that. Set up a new user with administrator rights and make sure it works and delete all the corrupt ones.

Also, make sure all your hardware including the hard drive is OK by running the diagnostics first. Include the extended hard drive test, not the quick one.

Thanks I tried the following

. Boot the computer using your vista dvd.
2. Select Repair. Then select command line.
3. Goto your recovery drive and then to the tools folder by typing following on the command prompt :

d:
cd tools

4. Then type this on the command prompt :

imagex /apply d:\dell\image\factory.wim 1 c:\

5. This will start the recovery process which will complete itself in 10-15 minutes.
6. Type exit on the command prompt.
7. Reboot your computer from your hard disk.

With no luck ( I think), the recovery process did not start that I could tell, should I see something in  step #5 . I assume that after Step 5 is complete( again is there some visual queue that something is happening) the step 6 and 7. Sorry kinda a beginner here