Windows 7 Home Premium won't boot on my Vaio laptop even in safe mode (stuck at classpnp.sys, then it goes to a BSOD and I'm forced to restart). I tried many solutions but none of them worked. 

After that I decided to boot from an USB with Ultimate Boot CD installed and ran every hardware test with positive results. Then I booted Parted Magic and it was able to mount the hard drive (even the system and recovery partition). From there I could just copy the files that I wish to keep to my external USB flash drive and make a clean Windows 7 install. The problem is that the transfer rate is painfully slow and I have a lot of pictures. 

I read that Windows creates a 'windows.old' folder when doing a custom install containing the old installation Program Files and Users folders. I don't trust that since Windows can't even boot in safe mode. Are my suspicions right?

The other option is to create a new partition with Parted Magic and dump all the files there, but if I do that the Windows installation program won't create a separate System partition (around 100 mb) and I read that it's convenient to do that instead of having Windows in only one for security reasons (it didn't work for me since I already have a separate System partition). 

So my question is: is it worth taking a long time transferring files to my other laptop for the sake of having Windows in two partitions? or should I just save time and use a new partition for backup? even better, is it possible to install Windows System in a separate partition when the hard drive already has an existing partition that I wish to keep?

EDIT: The VAIO recovery partition seems to be corrupted so I discarded that alternative. I also forgot to mention that I am able to run the Windows command prompt in the recovery environment but I don't know if there are any tools there that could be useful.