Laptop problems

When ever I turn my laptop on It says setup is preparing your computer for first use, and when I try to install my backup disk It just does not work, and all windows updates don't download and install properly, and along with that none of my new data is permanently saved on my computer.

Hmm seems you tried to reset your computer to factory settings, and some how got to use to again despite not being able to download your back up.
I think your problem is 1 out of 2.
1) Your windows 7 or 8 has something corrupted in it causing this problem, to resolve this is to either contact the person you bought the computer off and see if you have a warranty, or you can buy a new windows 7/8.
2) Your computer has a registry problem which will need fixing, it should do a basic check if you use safe mode, if not I advise go to a specialist.

Ill be sure to give option 2 a go first since I can use it on safe mode, but if not ill just do option 1 and get a new windows 7.

Hope I helped a little

Your hard drive is completely corrupt for sure, i suggest you take it back to the dealer and ask for a repair, this will cost you money unless you still have warranty.

Yeah my warranty ran out, and I had to get a new windows 7 and hard drive. But thanks for your help, it allowed me to figure out how much all that would cost me :/