Only goal is to have a new out of box hard drive to put  in and go with new out of box configurations to avoid going through a re install of the operating system. That avoids the long process of a  re-install at what usually manages to be some in-opportune time. 

All other data outside of the operating system will be backed up to a dedicated self contained external hard drive that will be used for updating data on a regular basis. I'm a big believer of multiple copies and multiple drives.

I have found that I am comfortable in my experience and knowledge of restoring data that I have saved to external drives. I don't however trust any software to make automatic backups though. Yes it is somewhat convenient but is always running in the background and I don't trust the integrity of some software to be able to restore things. I prefer to copy and paste files and folders in a hierarchy that makes sense to me that I want preserved to the external drive. It is more laborious and time consuming this way but I know it works and is free from other software glitches or changes that may occur when some future upgrade of the backup software that turns out to not be compatible with a previous backup. Yes it's always supposed to be backwards compatible but it does not always work that way.

Added programs that I download or add from the web are saved in a folder as over the life of the machine versions change and they may no longer be able to be found reliably by just saving a link to them.  Also I try and get discs of new programs when possible for more reliability.

The new machine drive save also helps lock in any drivers when the machine was new.  Say in 8-10 years from now there will be little chance of finding the correct original drivers on a website. This current XP machine is still faster than some of the low end new machines. I try and buy the most computer I can when I get a new one as I plan on running them for quite some time so I find it critical to try and lock down as much info as possible for original settings and configurations.