0) Sounds like an OEM copy so its only legal if you are changing the guts of your machine. Having said that, changing an IDE cable is enough to legalise it. Try not to step on the motherboard this time.
1) Format. You could always use Ghost or DiskImage to take an image of the disk, but that is generally sodding enormous.
2) You should have it on disk. If not, get one off them. You're right in that they are not allowed to sell it without a disk, even if its a recovery disk.
3) Given that your problem is lack of memory why the hell did you not buy another 1gb? It would have been less than £50 even as a 2gb kit.
I've been using 32 bit vista for 18 months with no crashes, 64 bit vista for 6 months, no crashes. I have 2GB in one and 4GB in the other.
Vista uses 504Mb to start up. Getting a vista machine with 1Gb is a waste of time.