how do i reset late 2011 macbook pro to factory settings?

Disable filevault first then you can access disk utility.

What to do before selling or giving away your Mac - Apple Support

Your model is possibly too old - here is a list of machines which can be used with recovery:

Computers that can be upgraded to use OS X Internet Recovery - Apple Support

OS X: About OS X Recovery - Apple Support

Since you have the disks, follow Kappy's advice and use them to boot from and then wipe your drive and reinstall the original OS.

First, did you check the model list regarding Internet Recovery? Because that is what you'd need in order to reinstall the original OS from Apple's servers.

However, I just realized this:

Your subject line states a late 2011, and now you say you've got 10.4.8 - there is a discrepancy: late 2011 machines came with Lion (or, if a bit earlier in the year, Snow Leopard), but not Tiger.

So, before proceeding, we need to know exactly what model/year/OS version yours came with.

And yes, you need to disable filevault.

And, if these are the correct install disks, then once you boot with it (holding down C key), you should first see a language selection, and on the next screen, you should have Utilities/Disk Utility in the menu bar.

Did you try Command + Option + R? That should work if yours came with Lion or you installed the required update if it was SL - that is internet recovery rather than local recovery - here is some info:

https://support.apple.com/en-us/HT201314

All Mac keyboards have an Option key - it is on the left of the Command key (in the Windoze world, it is referred to as the Alt key).