Hello TrueRock,
Thank you for your reply.
Going through the issue description and conversation so far I understand that, you are trying to test your recently created Windows 7 recovery disc. In the process of doing so you noticed that, System recovery tool indicates you to select and operating system to proceed with repair, but since there is no operating system listed, you can’t proceed with it, whereas the operating system is fully functional.
What appears to be the reason for operating system not being listed in system recovery tool is probably the partition contacting system files is not marked Active.
Let’s follow the steps below and Mark the system partition active from command prompt and check if that solves the problem.
To Mark partition Active press Shift F10 (Or the key or set of keys applicable in your computer) at first screen when booting DVD or Repair CD, or choose Command Line from Repair Console's Recovery Tools list.
Type the following command and press ENTER after each command.
DISKPART
LIST DISK
SELECT DISK 0 (confirm from list this is Windows 7 HD Number)
LIST PARTITION
SELECT PARTITION #(replace # with Windows 7 partition Number)
ACTIVE
EXIT
Now return to Recovery Tools and check if Operating system is listed there.
Note: Don't mark a partition as active if it doesn't contain the loader for an operating system. Doing so will cause your computer to stop working.
Hope this helps. Please let us know the status. Feel free to write us back in case you face any other issue with Windows in future, we are here to help.