You should remove the Drive letter if you can... Usually partitions like that do not have drive assignments within Windows, don't know why it was assigned in your case. Hm... Ive had it happen to me a few times working on clients machines, the Reserved Partition was being given Drive C before even booting Windows. In Windows it was some other letter, but being set as C while booting was preventing the system fro booting to the OS, it was only bringing up the Restore Partition. Removing the letter didn't help either. (Clarification: The Motherboard was assigning that partition as C- using other Bootable Media, exploring the drive would show that partition as C).
I had to fix the MBR using Partition Wizard, and then use Fixboot and FixMBR, it was XP. That was the only way to deal with it,