Replaced hard drive, locked out of Windows, Recovery DVDs freezing?

My fiance has an HP Pavilion G61 laptop. He purchased it through a rental company back in 2010. Last month, the hard drive fritzed out and died on him. We had it replaced through a local computer repair store, as his laptop was no longer under warranty, but when we got the laptop back, Windows was not activated on it. We called them back and asked them to fix the issue, but after a few days, they discovered that the Windows code had been locked out and was unusable. We searched online for similiar instances and he was told to purchase the HP system recovery DVDs and run them, and that when the recovery was done, it would be back to factory settings and Windows would be activated. We received the discs in the mail after buying them from HP, and can get Disc 1 to run fine all the way to completion. Then we get to the "Insert disc 2" screen, and we put the disc in and...nothing. Absolutely nothing. It freezes on this screen every single time and does NOTHING. We're incredibly frustrated and he is talking about trashing the laptop because it's completely useless at this point. Can ANYONE help me out and tell me what is wrong and how to fix it? 
For reference, it's Windows 7 Home Premium edition that was on his laptop.

I would test the hard drive and memory just to be sure there is not some hardware issue causing the problem with the recovery discs.
When you first power up the notebook, use the F10 key (tapping rapidly) to enter the bios and run the diagnostics. Post back any messages or errors please.
I can help you get Windows installed without the HP discs but is a huge undertaking and should be a last resort.
Also, Please post your full product Number for me.
http://h10025.www1.hp.com/ewfrf/wc/findModel?cc=us&dlc=en&lc=en
#2
Please Do Not post your s/n

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