If you set the BIOS to boot CD before HDD, you'll be using our repair CD, but I'm not sure it will help you.
The data sets involved in your screenshot would indicate that the system is attempting to rebuild the OS from the component store (Windows\WinSxS), but fails with an I/O device error, so it's likely that your HDD is corrupted.
You might try running a chkdsk /r against the OS partition from a command prompt before trying the OEM recovery again, but unless you're very lucky, or you already used the opportunity to create portable recovery media when your PC was healthy (It probably prompted you to do so the first time you switched it on out of the box - are they sitting in a drawer somewhere ?), you'll probably need to contact the OEM support line for portable recovery disc(s) to get a factory reset working.
You should be able to use our Linux based recovery disc to rescue your user files first if you need to.
Use Ubuntu Live CD to Backup Files from Your Dead Windows Computer - How-To Geek