Well at this point, I think you should start a new thread in the Windows 7 section and asks your questions there, since we're no more dealing with Windows Update issues :)
Reinstalling Windows 7 is a piece of cake if you ask me. All you need to do it boot from the installation media, clean the partition on which you want to install Windows and launch the install. Afterwards, install your Windows Updates, drivers and you're ready to go.