What is the wisest choice for an OS and vender

three computers
my wife's vista is fine and i think she has a recovery disk.
my VAIO has 7 64 bit and no problems

but my home office Dell is on the way out.the hard drive has bad
sectors.
I got it for $100 bucks and been using it a few years.

I was told that if i image the drive or create a recovery CD using my
current C drive, all the problems will be passed along to the new hdd.

I am using EaseUS TODO free 4.5 backup to an external USB Hard drive

so

I will repair one of the pcs and need to invest in an OS. (Repair
means buy a new hard drive)
I am totally fine with XP Pro, but am seeking advise.
I have never installed Windows before but am game.
Also I do not understand all the licensing issues and potential
problems buying the software on eBay.

thanks in advance