The best way I have found for recovering windows is to:
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Download and burn Ubuntu Live CD. Make sure you burn it correctly with an iso burning program like imgburn. You need to have at least 256mb of RAM on the laptop to run the live CD.
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Run the ubuntu live CD and select “Try Ubuntu”. This will give you a fully functional desktop that does not affect your HDD.
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Mount your HDD by selecting “places” and clicking on your drive. Be sure to select the correct partition as you will be also be able to see the recovery partition (if you have one) here which you should not mess with.
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Transfer any files you need onto an external hard drive or usb pen (if you have one large enough).
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Insert the recovery CD or windows install CD to format and reinstall. Be sure to select full format to make sure that virus is gone completely.
MAKE SURE you have your product key before you format (if you are using a windows CD) as you will not be able to recover it after. If you do not have a sticker with the key on then you will need to extract it.
How to extract:
Go to C:\WINDOWS\System32\ and copy the “config” folder to a usb drive with the same folder string i.e. place a folder on the root of the drive called WINDOWS, inside that a folder called System32 and place the config folder inside this folder.
Next on a windows machine download keyfinder and install. Depending on your security you may get some warnings. This is a safe program but needs to access sensitive parts of the system hence your firewall may flag it. Once installed go to tools > load hive and point it to the WINDOWS folder on your usb drive. It should now be able to read the key from there.
Good luck.