I don't understand why you would have to set Vista to factory defaults when you run the bootCD.
When I insert the CD and the computer is running Vista I can access it like any other data CD.
When I restart I get a dos screen with the option to boot from the CD (and if I don't do anything that's what will boot after a minute or so) or from the hard drive (plain Vista as it is before you push the restart button).
When I have booted from the CD I can access my C drive (and any other drive attached to my PC) and all files on it, just like I access my external D drive from Vista.
So I can choose to format C (don't do that yet - we don't know if it is necessary to do so yet!!!) and I can access the DriveImage XML backup of my C drive, which is placed on my D drive.
Since the program DriveImage XML is also installed on the bootCD I can start the program, select 'restore image', browse to the file on my D drive and order it to restore it (that last part I haven't tried out, because there was no need to do so, but I see no reason why it shouldn't work, while all the rest of it worked;-D).
I have looked at those sites where you can storage large files, but the maximum size for upload is 50 MB for each file. I have a LiveSkyDrive which allows me to upload up to 5 GB for free, but I need to split the iso first. I'll look for a program that can do that, but since one of the files on the CD is 177 MB I'm not sure it is wise to split it.
So now that you do have a copy of the Vista installation disk, I think it is easiest if you follow my description and make your own iso using WinBuilder. With WinBuilder also comes a little free app called Iso Burner that you can use to burn the iso to a CD.
You can also download it here: http://www.ntfs.com/iso-burning.htm
If you're not sure your Vista installation disk is ok (you need to copy the data to your hard drive - WinBuilder has it 'easier' that way) WinBuilder will let you know, and even if that wouldn't happen you can check the iso before burning with the virtual environment an so errors would be clear.
However, since your system apparently doesn't have as much resources as mine and this might be rather taxing for you on a system that doesn't function optimal, I'm off to look for a splitting device and I'll upload my iso in split form to my Windows LiveSkyDrive.
Hopefully splitting won't be a problem.
If it doesn't work out you may have wasted an empty CD, but there won't be more harm than that, so it's worth the risk:)
I'll post the links here when I'm done.
And we'll see what needs to be done after that. Hopefully Lighthouse or someone else with knowledge about these things can tell us how we actually need to go about restoring the image.
I know the steps for Win98 SE, but Vista might have requirements we need to see to, so I'd rather be safe than sorry ...