My experience with backups is that the backup system that comes with XP is good at backing up my system files. It is under Accessories --> System Tools --> Backup. You can backup just your own personal files, or the entire system. I just backup "My Documents and Settings", but you can select much more, and even do a custom backup where you individually select things. I like to leave my C: drive with just the operating system and some basic programs (MS Office, Outlook) that I normally use. All games, etc.. go onto a second D: drive, and then I use my 300GB USB as my backup.
Whenever I did have a system crash, it was more reliable in the long run, to just slick the C: drive, reload XP, and then use the XP backup tool to reload the backups I had previously saved onto my external USB disk. I can then reload any other programs from their boxes.
That's just my system, and I'm stickin to it....LOL