DJ Ampere's blog: "Creating a System Image Backup"

Windows 7 has a nifty built in backup feature that allows you to take a snapsot of your entire system as it currently sits.  This feature is known as a "System Image Backup."  A system image backup will back up your ENTIRE computer (programs AND files) to an external source.  Once this backup is done it can be used to perform a Bare Metal Recovery...also known as the ability to perform a complete pc restore due to catastrphic drive failure.  The only catch to this is that the replacement drive needs to be of equal or greater size or the restore will not work.

Now we will explore the steps to perfom the backup:

Step 1:  connect your external media

Step 2:  click the start button and type in the box "backup" and click "backup and restore"

Step 3:  Click "Create System Image"

Step 4: Select where you want to save the backup.  NOTE:  windows 7 will not allow you to save the backup on the same drive you are backing up.  External Media (DVD or USB Harddrive) are the preferred choices.  NOTE:  even though network location is a choice it is not supported!!  You can back up to a network location but you can not restore from it (in the recovery council network locations are not supported)!!

Step 5:  Choose which drives you want to back up.  C: and system reserved are checked by default.  I also recommend checking any recovery partitions that may be available.

Step 6:  Confirm your backup settings and start your backup.  There will be a warning here that any previous backups will be overwritten.  Backup time will vary depending on the size of your harddrive(s) and the amount of data being backed up.

Once the backup is complete windows will ask if you want to create a system recovery disk.  it is recommened to have one as it will allow you to boot your computer into a recovery mode without needing your installation media (which most computers don't come with these days).