The only difference is that I upgraded to Windows 7 few months ago and now when I initiated Rescue and recovery, it allowed me to back up my personal data and also went through the backup of OS etc.
Now when I try to restore the system it gives me two options "restore the personal files......" and " restore only operating system.......................".
The second option gives me same "Final C" CD issue as you have mentioned and the first option doesnt do anything ( "next" remains greyed so cannot do anything).
How to get out of the Rescue and recovery? I have Windows 7 installable and boot cd but gives the same issue. Also, I want to recover my personal data which is in USB drive and I cannot see it or copy & paste in a typical way.