Been trying to help out a family member whos PC is a mess. How do you reset to factory default or original state. He knows he will lose everything but doesn't care.
You do need an 'Operating System' CD to install it back on your computer. You get it with every new computer, you could use a friends, buy a new one or get a copy.
Your friend will lose any important data but he could save what is important to a floppy or CD.
You should 'google' for problems that arise from reformatting, it is not the 'be all and end all' but it is the answer to most pressing problems.