Hi,

I would do this:

- You can still buy the new HD and install it but put the old one in a HDD external case (around Ł15), run Ubuntu LiveCD (it is free and runs with no install from the CD/DVD drive,you just need to make sure your system boots from CD/DVD) and see if it can recover or read the files. More often than not, when you still get Windows trying to start, the good old penguin (Linux Ubuntu or any other) can still read some files and retrieve them. If it can read copy them over to another drive ( if you want to copy them to the new one make sure that Windows is pre-installed otherwise when you install Windows it will erase them). You can test if it can read even before you change to the new HDD by running the LiveCD.

-For your new drive to work properly, you will very likely need the recovery media for your specific system. Many manufacturers these days "tattoo" the drives and as such if you try to OEM or install Windows on its own it may not work. This tends to be an increasing trend particularly if your laptop is about 3-2 years old.
Windows restore is gone with the dogs with the old drive if the drive is really faulty and plus it tends to put back any other problems that OS had before(system restore is pretty much just a backup).

Complete System Recovery or Full Destructive Recovery is what you want for the new drive ( or the old one if it turns out that it's ok and you want to keep it but obviously this erases all your files and we don't want that without having backed them up with Ubuntu LiveCD).

You can download the Ubuntu LiveCD free or pick a copy or image buy buying Linux Magazine or Linux Format magazine. It can read,format,create partitions or repartition in any file system, NTFS,FAT32,FAT16,HFS,ext2,ext3....so on, so on.

But don't forget that if your old drive is really gone and you haven't created the recovery media, you will have to very likely order it from the manufacturer.

Long gone are the days that OEMing a PC was easy....

I hope this helps.