Hi John,
Thank you for clarifying your issue.
To the answer of your question there is no such location/place where information saved on the computer when you restore the system to prior date.
Apart from two option which you have provided I want to add one more in that which might suit you the best. It is called
In-Place Upgrade/ Repair.
Note: Performing a repair installation will not damage files and applications that are currently installed on your computer.
It will also not damage the data but to be in safer side we suggest you to have a back up of your data so that in case if your data lost while performing repair installation then you can easily back it up with the help of back up which you have created.
You may refer to the link provided below to perform repair installation on your computer.
How to Perform an In-Place Upgrade on Windows Vista, Windows 7, Windows Server 2008 & Windows Server
http://support.microsoft.com/kb/2255099
Important: Ensure that you back up all your data before you begin the installation.
Refer to the link to backup files on the larger drive before installing the operating system:
Back up your files.
http://windows.microsoft.com/en-in/windows7/back-up-your-files
Hope this information is helpful. Please do let us know if you need further assistance with Windows, we’ll be glad to assist you.
Thank you.