Ok, found something odd. Not sure if it could be the related, but there's something on my startup named Acer GAIA AppInRun, Manufacturer is Unknown and in a sense, can't be disabled for good. I disable it, reboot the system and when i look again, a new entry appears Enabled (with another entry, exactly the same, Disabled).

Disabled everything, still the same :(

This might sound silly but try disabling the WiFi/bluetooth card either via the button or in BIOS and give it a reboot.

If you don't mind formatting your computer again, you could always try downloading an ISO of Win7* and doing a format and fresh install with that. It'll be in trial mode until you activate it with a legitimate key but it will give you I think 30 days of normal operation which should be plenty enough time to see if it's running properly and remove the whole system restore disc element from the equation. If it works for a full week without complaints, it means there's nothing wrong with your hardware.

Because its a HP, you'll probably have a specialist OEM key (basically just to identify it as being from HP rather than bought off the shelf, HP buy in bulk so get windows a lot cheaper) rather than a generic retail one so it may not work activating a normal version of windows but if the trial of win7 works then you know the restore discs are the problem and can find a replacement.

http://techpp.com/2009/11/11/download-windows-7-iso-official-direct-download-links/
The digitalriver links definitely start a download so I'd suggest them. Download whichever version you have and maybe your key will actually activate it (stranger things have happened, GOG signed EA for example)


*This might sound dodgy but microsoft don't give a toss about people copying their media, they sell licences which you DO already own

I actually called eMachines tech support (i have an eMachines not HP :P ) last night...well, not called, but live chat online. They determined it was hardware related and since i'm still on warrenty, they'll repair it for free, all i have to pay is one-way shipping.

So we'll see how that goes.

Not having direct access to you computer and having tried everything else . . . I offer one last suggest for you problem, a long shot but . . .

Because you always get the same error . . . since the beginning of the problem and even after a system restore I'm starting to think the keygen may have written to your boot sector. Adobe did something similar with their DRM when CS first came out. If it is loading a driver from the boot sector the system restore may be doing a quick format and leaving the boot sector intact which may be how the driver is avoiding deletion / detection.

The next thing I would try is a full format of the disk with fdisk or another disk format utility. I have several bootable cd's / bootable programs on cd which could do this but . . . you probably don't. It would take lots of time to explain how to create a bootable cd / DVD so I will not attempt to do so. There are partition programs both retail and free that will doing the job as well.

I have never used this but find tutorials and ISO burning software here if your burning software will not burn a bootable ISO disk. Once you had the bootable disk you would boot to it, use one of the utilities to do a full format and then shut down, boot to your System Restore Disk 1to restore the system.

Downloading the ISO and burning it to a bootable disk is lots of trouble after which you would have to use a program you are unfamiliar with. Seagate, Maxtor and Western Digital all have bootable disks that come with their hard drives for doing the job if you have a friend that has replace a disk lately. Seems I remember WD's disk only worked with WD hard drives though.

Did your System Restore disk offer to do a "full" format? If so and you did the full format (takes a while but it's worth the wait) than disregard all of the above . . . =)

Sent it to eMachines yesterday so they could look at it since they said it was possibly a hardware failure.

Totally forgot to reply here, i'ld like to thank everyone that chimed in trying to help me.

eMachines seems to have reinstalled the OS and send the laptop back to me. I did have to pay for S&H one way to them, but it's been working fine ever since i got it back.