I can’t repair my windows 11, how should I do a system reset/reinstall?

I think my window 11 is broken and I haven’t been able to repair it because things like windows update, sfc, dism etc also seem to be broken and kept failing. So I want to do a system reset/reinstall but I would prefer to keep my personal files because I dont have a big enough external drive. Also for some background, this current windows was installed 4 years ago when making a local acount was pretty easy. I want to keep using a local account after the reset, whether it being the same account or a new local account if making one is still possible.

My first idea is to use the “reset this pc” from settings with the “cloud download” option. But im a bit hesitant this will work because even windows update kept failing to download and install. My second idea is to use an iso. I have never use an iso before so I dont know exactly how to do it, but if a local account is possible with this option im willing to try.

Which one should I do? Or is there a better way to do it? Any suggestions would really help. Thank you