Chris
Regarding the disc with SP1 update. Not certain, but I think I recall SP1 being delivered as a Windows Update.
If you got the disk with the computer before February 22, 2011 then it does not contain the SP1 update. If it contains the SP1 update then there are less updates to reinstall so it does not take so long.
I have got quite a comprehensive step-by-step guide to installing a clean system which I have updated over the period, and each time added to it as appropriate.
If you feel more comfortable doing a clean install then do that. Restoring from a system image can reintroduce the errors, if any, in the system image.