Can anyone direct me how to do the error handling and recovery system for my test project?
ie. if I have 10 tests in my project and two fails when executing the tests, how can I let the remaining tests continue running?
I guess, you are running multiple test items in the same project and the project's execution stops when an error is posted to the test log. If so, you need to disable the "Stop on error" option described in the "Project Properties - Playback Options" help topic and the "Stop on error" property described in the "Test Items Page (Project Editor)" help topic to make TestComplete continue the execution after an error occurs.
How can I restore the system for the next test if an error occurs
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As I understand, you mean restarting the tested application so that it is returned to the initial state necessary for further tests. If so, you can implement an event handler for the OnLogError event (see the "Handling Events With TestComplete" and "OnLogError Event" help topic for more information). If you implement the event handler, you will be able to perform the following actions when an error is posted to your test log:
1. Check the error's text. If the error is critical and the current test needs to be interrupted, go to step 2.
2. Perform all the actions necessary to return your application to the initial state.
3. Use the Runner.Stop(true) method call to stop the current test item and make TestComplete run the next test item (see the "Runner.Stop" help topic for more information).