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Is he telling me the truth or can I use my own Win 7 disc, the notebooks Product Key & successfully activate for internet use?
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No, he is lying. You can use your disc along with the product key on the back of your laptop.
You can make backup discs with Windows 7 Backup, but it sucks and doesn't always work correctly. If you want a good free backup program, use Macrium Reflect Free. Just Google it and you'll find it.
Most people get confused about Windows 7, it's the PRODUCT KEY that differentiates between whether or not it's a Full Retail disc install, an Upgrade Retail disc install or its an OEM install. In addition, the key works for either a 32-bit or 64-bit install. Just one install per product key though.
You can also install the other laptop software also, such as the hotkeys and that stuff. Just download them from the laptop maker's website. Be sure to download the correct drivers also before you do the install and save them to an external drive or a thumb drive.
You didn't state whether you're using a 32-bit or 64-bit on the laptop. If it was me I would do the 64-bit, you'll be fine with the 2GB of RAM and you can always add more at a later date.
If you need to download the 64-bit version of Home Premium go here for the ISO image download and then burn to a good quality blank DVD with ImgBurn at no faster than 8X burn speed and the verify the burn on ImgBurn too.
Windows 7 ISO – Official Direct Download Links
I hope this answers some of your questions and gets you started.