Good morning,
I would think it's sensible to try and fix the system before worrying about the software.
It could be your recovery media that is the problem, trying the Vista ISO would cost you nothing other than your time, if the ISO will not install to the HDD when the DVD is disconnected it would suggest that the HDD has issues, you then have the option to replace the HDD or sell the computer without one, the latter is not uncommon and to cover yourself on ebay just let people know that you had problems with a reinstall, its up to others to decide if they want to purchase it.