INSPIRON PROBLEMS - NEED HELP TO RESTORE TO FACTORY

Hey I know this isn't really a hardware issue but it's definitely not audio nor video, and that's the only options in this forum ???

Anyways, here's the issue, my sister's Inspiron 1545, just over a year old, started being extremely sluggish yesterday, it litterally took about 15 minutes to boot up, login etc. until getting to the desktop. It's almost impossibly slow to even do anything with or troubleshoot etc. Tried rebooting, and nothing, still very very slow. We were able to get it in safe mode to backup most of her files (though still extremely slow, 17 hours for about 30GB of stuff!!) After running numerous spyware/virus scans etc. and cleaning up the system, it's still very slow, so I have no idea what's causing it. Figured the only option now is to restore it. Well there are no previous restore points so the only option is to go back to factory.

Unfortunately her laptop did not come with a windows 7 disk (I guess this is common practice now) but we do have the original image backup we made when the laptop was brand new. Tried restoring from that and about halfway through a box popped up stating "system restore failed" because apparenlty a certain file was missing. After trying to click any other options or trying again it all came up with error messages and said to restart the computer. After restaring I tried restoring through Dell Data Safe Backup (or whatever it's called) and after selecting factory etc. it came up with something along the lines of "Not enough disk space to perform system recovery." This is highly unlikely, as she has over 300GB of free space. So now i'm trying to restore from those image disks we made again, and am crossing my fingures. Incase it fails again, (which I have a feeling it will) what should I do? Anyone have suggestions or tips? It's worth noting that I also have an Inspiron 1545, though a year older than hers, and it came with a Vista home premium CD, and I received a Windows & upgrade disk shortly after from dell as well. I'm just wondering if I could blow out her system and then just put a fresh install of Windows 7 on it, instead of messing around with this system restore stuff, which is obviously not going anywhere. Would I have to first install vista and then upgrade it? Also what about the security key thing? Would Microsoft flag it as there's another laptop (mine) running windows 7 with the same key? Or would it be possible for dell to send a disk and/or key, because it did come installed on the laptop after all.

Any help at all would be very very much appreciated! I have already tried figuring out how to contact Dell support but can't even find where to send an e-mail, if nothing comes up i'm gonna call them tomorrow.