Sounds like you have got your work cut-out... lol
The drives problem, should be resolved by using teh "Add Hardware" wizard from the Control Pannel
As for the factory settings, you can only do that by formatting by using the recovery disk. If your nephew has lost the recovery disk (or hasn't made one from the hidden partition and the files are missing) I would contact the company who sold the system to your nephew's granddad.
Good luck to you mate....