Windows 7 allows creating a bootable System Repair Disc - CD or DVD that boots right into Repair your computer options. This disc launches so-called Pre-boot Environment (PE) and it cannot be used to install Windows. You can also create the disc in Safe Mode of Windows 7.
The disc is meant for those who do not have a bootable Windows 7 DVD - this is a common case as there is no DVD bundled with computers that have Windows 7 preinstalled (the OEM versions of Windows). It is strongly recommended to create the disc before getting into trouble - if you cannot start Windows 7 in Safe Mode, you will be out of luck in repairing your PC.
Please bear in mind that a 32-bit (x86) Repair Disc can only be used to fix 32-bit Windows 7 editions and a 64-bit (x64) Repair Disc works with 64-bit Windows 7 editions only.
A good thing is that you can repair any edition (Starter, Home Basic, Home Premium, Ultimate, etc) of Windows 7 with this disc, as long as it is meant for the same hardware architecture (32-bit or 64-bit).
Windows Vista had the same 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 7 System Repair Disc
First, make sure you have a blank CD or DVD. And I 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.
To create the disc, open Start menu and type "repair" into Search box. Click Create a System Repair Disc.
Create a system repair disc opens. Make sure you have inserted a blank media and click Create.
The process start with preparing files for the media. This takes up to a few minutes.
After this, the files will be burned to the media. This might take up to 5 minutes.
If an error stating "The disc in the selected drive is not blank. You must erase the disc before you can use it." appears before creating the disc, the media is not blank. Click OK and erase the disc as described above. Then return to this program and click Create again.
After the process has completed, an overview of the disc capabilities appears. Please note the suggested label - this defines whether you can use the disc for repairing 32-bit or 64-bit editions of Windows 7.
Click OK and close the program.
Here's the list of files that a typical Windows 7 System Repair Disc contains.
To see the sources\boot.wim file in Windows 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.