Install the New Hard Drive, and clean install Windows 10 with the Generic Key - once the PC goes Online it will receive a Digital License Key from the prior activation of windows 10...
Or clean install windows 8/8.1 - it will install using the Key embedded in the BIOS - then upgrade to Windows 10
Without Internet - you will not be able to download updates or drivers... It appears you need the driver for the Audio and Network Card... Best to use your PC, go the MFG's website and download the driver for that make and model - copy to USB and the install drivers on the friends laptop via USB...
The reason is those files are still being accessed by the running OS - thus the easiest way to removed them is when to OS is offline - thus I would boot into WinPE and delete the folder - then reboot into the OS...
You would boot from the "Windows Installation Media"
Then when asked where to install (HDD Partition Screen)
Delete EVERY partition
and point to the unallocated disk space
Windows will create it's own partitions....
use diskpart to assign the drive letter R
open file explorer and post a screen shot of the files and folders on R
You can now browse thru R and find Install.wim or Install.swm(s) - those are your Factory recovery Images..
there are two different settings..
One is for Recovery Tools (WinRE.wim)
One for the Factory Image
You would boot into WinRE to Restore the Factory Image...
Not sure what you mean "it just boots into ISO recovery"