Windows reset in Windows 8/8.1 should use the recovery partition... If it's present.
If it's absent, the reset will work with Windows CD/USB, with the recovery partition in it... If you created It during the first installation.
If there isn't a recovery partition in your HDD, and if you didn't have a recovery USB/CD, the reset won't work.
The same is valid for the refresh function: you can create new refresh images with a special command (recimg, from an elevated command prompt).
Both images are (were) usually preinstalled by the OEM.
In my case, I purchased a Packard Bell machine and the reset/refresh images were in two recovery partitions (last partition in the disk was 16GB in size, and It contained the reset Wim, i.e. factory defaults).
But what saves our a**** is always a system image, created with well known tools (macrium reflect, acronis true image, aomei backupper, iperion backup, easeus todo backup, and so forth).
