Windows 8 allows creating a bootable System Repair Disc or Recovery Drive - CD, DVD or USB drive that boots right into Recovery Environment (aka Limited Diagnostic Mode) that allows repairing problems, running System Restore or Refreshing and Resetting your PC. The drive or media cannot be used to install Windows. It is similar to Windows 7's System Repair Disc.
Recovery Drive (the USB version) or System Repair Disc (the CD/DVD version) is meant for those who do not have a bootable Windows 8 DVD - this is a common case as there is no DVD bundled with computers that have Windows 8 preinstalled (the OEM versions of Windows). It is strongly recommended to create the drive or disc before getting into trouble - if you cannot start Windows 8, you will be out of luck in repairing your PC.
Please bear in mind that a 32-bit (x86) Recovery Drive can only be used to fix 32-bit Windows 8 editions and a 64-bit (x64) Recovery Drive works with 64-bit Windows 8 editions only.
A good thing is that you can repair any edition of Windows 8 with this disc, as long as it is meant for the same hardware architecture (32-bit or 64-bit).
Please note that you cannot use Refresh or Reset Your PC features if Windows is installed on a drive with GPT (not MBR) partition table until you force "UEFI only" boot setting in BIOS/EFI. Windows 8 will not detect GPT partition alignment correctly if BIOS booting is enabled.
Windows Vista had a similar option (called Windows Vista Recovery Disc) until Service Pack 1 was released, but somehow Microsoft decided to disable this feature later. The file is still there, but launching it does absolutely nothing. Restoring a pre-SP1 version ends up with asking for Windows Vista installation DVD - so it is a dead end for those who never got the media.
Those in desperate need for the Windows Vista or 7 Repair/Recovery Disc can pay $9.75 and download one from SystemDiscs. Make sure to download the correct version (32- or 64-bit) of the disc!
Creating the Windows 8 Recovery Drive or System Repair Disc
First, make sure you have a blank CD/DVD or a USB drive with at least 256 MB (megabytes) of total disk space.
CD or DVD must really mean blank, because the program is not capable of overwriting rewritable media! You can blank a CD or DVD by opening Computer, right-clicking a CD/DVD writer in the list and selecting Erase this disc.
USB drive can be a simple pen drive (stick) or a USB hard drive. Please bear in mind that this drive will be formatted and you will lose all files on it. Do make a backup of your important files first!
To create the drive, open Settings Search with keyboard shortcut Windows key+W and type "recovery" into Search box. Click Create a recovery drive.
As expected, User Account Control pops up. Click Yes to verify that you know what you're doing.
Create a recovery drive window opens. Insert a blank, writable CD or DVD, or connect a USB drive. Then click Next.
Windows 8 automatically detects available media after this.Click here to show or hide instructions on creating a bootable USB Recovery Drive
If you want to create a bootable USB Recovery Drive, click the correct one in the Select the USB flash drive window. Then click Next.
Windows 8 will then warn you that all contents of the selected drive will be deleted. To continue, click Create.
The drive formatting and file copying process might take several minutes, depending on the speed of your USB drive. After the drive is ready, click Finish.
If you prefer to create a bootable CD or DVD System Repair Disc, click the Create a system repair disc with a CD or DVD instead link in the bottom of the Connect a USB flash drive window.
Create a system repair disc window opens. Select the correct drive and click Create disc.
If you did not insert a CD or DVD, you will see the "System repair disc could not be created, There is no media in the device (0xC0AA0202)" error dialog. Click OK, insert a blank writable disc and the process will automatically start.
In case the inserted CD or DVD is not blank, you will see the following error dialog. Click OK. Then open Windows Explorer (keyboard shortcut Windows Key+E).
Right-click your CD or DVD writer and select Erase this disc.
In the Ready to erase disc window, activate the Close this wizard after the disc is erased option and click Next.
Creating the System Repair Disc might take several minutes. After the process is complete, label the disc as instructed and click Close.
You can then safely close all open Create a system repair disc and Recovery Drive windows.
Here's the list of files that a typical Windows 8 Recovery Drive or System Repair Disc contains. Yes, the CD/DVD and USB contents are identical.
To see the sources\boot.wim file in File Explorer, you might have to disable the Hide protected operating system files (Recommended) option temporarily. See the Change folder views and options in Windows article for instructions.