Originally Posted by MrJack
File C:\Windows\System32\config\SYSTEM is part of system registry,it is responsible for HKLM\System hive.You must realize
if any registry file is corrupted installation disk never detect system on HDD.
First I strong recommend diagnose your hdd,it would be caused by bad blocks
To diagnose HDD use manufacturer tool applicable for your model Bootable Hard Drive Diagnostics - Vox
If there are no errors on your hdd you can attempt to fix,but I don't guarantee it will work.
1.Burn any Linux i.e Ubuntu and boot it
2.Navigate to Windows\System32\config
and rename SYSTEM file to SYSTEM.OLD
3.Navigate to Windows\System32\config\RegBack
,find there SYSTEM file and copy it to Windows\System32\config
4.Reboot & run your system on hdd