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Using the system image will delete the contents of your C drive, not any other drive or partition

If you can find the image on that drive, then use that image

When selecting the system image folder inside the partition, does the whole partition get erased, as the backup image is on the same partition that contains my stuff?

If you can find the image on that drive, then use that image

the image recovery is not an option

Is it an option available to me now after copying the system image from partition H to G

If you were able to copy the system image, then try using the image recovery option, if that does not work, then you will need to clean install Windows from a bootable USB.