A technique that has worked for me is to partition my drive into two partitions, a āCā drive ONLY for system items, and the remainder of the disk as a āDā drive for all personal data. I normally allow around 50 gig for the system partition.
This way, I can do a system image and I am ONLY imaging my system data. Now, 50 gig is STILL over 10 DVD disks. This is NOT a good way to back up. I'd recommend getting an external USB drive to image to. I've done this for years, and with the win 7 ability to create a boot restore CD, recovery is so simple.
I do love this feature of win 7.
Easeus Partition Master is an excellent free tool you can use to do this.