Your process for merging the split installation files using the native Deployment Image Servicing and Management tool is completely accurate. However, your proposed method to surgically extract just the Windows directory using a third-party utility will result in a catastrophic system failure rather than a clean repair. While your extraction flags correctly handle file attributes and access control lists at the filesystem level, this approach fundamentally breaks the logical architecture of the operating system by destroying your existing registry.
The core registry hives, specifically the Security Accounts Manager, SYSTEM, and SOFTWARE files, are physically located inside the target directory at C:\Windows\System32\config. Overwriting this directory with a factory-fresh copy from the installation image will erase all records of your installed applications and hardware configurations. More critically, your system will no longer recognize the security identifiers tied to the untouched C:\Users folder, locking you out of your profile and likely triggering a User Profile Service login failure. Because the extracted component store will completely desynchronize from the rest of the disk, the operating system will fail to boot properly.
To achieve a stable and precise repair without formatting the drive, you must rely on the native Windows servicing stack. The Microsoft-supported procedure is to mount your intact image file and run the native DISM cleanup-image command with the restorehealth parameter pointed to your mounted source to surgically replace corrupted system files. If the corruption is generating fatal file errors like 0x80070002 that DISM cannot resolve, you should perform an in-place upgrade by executing the Windows Setup executable directly from within your running environment. This method completely rebuilds the Windows directory while safely migrating your critical registry hives, user profiles, and application links to the newly repaired operating system.
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VP