(1) That's getting pretty bad, when the computer tells you its system files are corrupt. The only thing, really, that can cure system files are system files.
(a) One cure is an upgrade-install, but we're already having fun doing that.
(b) Try the DISM & SFC duo, in that order, but often they prove to be inadequate, saying there is nothing to fix or saying they did fix it - but still the problem remains...!...
Use the System File Checker tool to repair missing or corrupted system files
And good luck, if they refuse to run or spit out error messages or names of files they can't repair.
(2) Yes
- the ISO or Installation media must match or exceed the OS version that is installed. (The same is true of the Recovery drive.) Yours qualifies. But you can't boot to an ISO unless you burn it to a DVD. You need to boot to it to get to the "Repair this computer" option that will go to the recovery environment. So, either burn that to a DVD (right-click the ISO for the option to burn it) or go back & make a USB version...
https://www.microsoft.com/en-us/software-download/windows10
Download Windows 10 - Currently, this is version 1709
That is version 1709 now - not v.1703.
(3) Maybe try to make a Recovery DVD (Repair Disc), at "START, Settings, Update & Security, Backup, Go to Backup & Restore (Win 7)" (or ask Cortana for Control Panel, & select Backup & Restore)...
(4) At your ROG site, I think I see it is the ESC key that will get to your UEFI boot options screen. Hold the ESC key as you boot for the boot menu. Then select the DVD or USB Installation media. (Or select the Recovery DVD or USB, if you've been able to make one.) When it starts, remember to click "Repair this computer" at the lower left instead of to install.