In addition to what Kerry said, you need to do some sort of off site backup
at least once in a while. That way if you have a fire at home, you can
restore at least SOME of your data.
I store all my data files under "My Documents" and sub-folders (any location
will do, but this made sense). This makes it easy to grab the files and
drag them to the disc. I've got copies of all my program's install discs in
my desk at work along with copies of the registration information (license
numbers and the like). I back up my data files to DVD's (re-writable) at
least once a week. Then I occasionally copy that data to a new disc and
take the old one to work and leave it in my desk at work. I don't try and
backup the entire drive all the time--I just back up my data and if/when I
need to start over, I just reinstall the OS, install the required drivers,
install the firewall and anti-virus software (and IMMEDIATELY update both)
and then restore my data files. Outlook likes to store it's files under a
location that is NOT in "My Documents"--I changed that on my machine. My
email gets backed up along with everything else.
All my important paperwork (old tax returns etc) has been scanned and
archived to DVD as well and stored both at home and in my desk at work.
I have a digital camera and all photos I want to keep get stored along with
the "import papers" DVD's. When someone gives me a picture that I think is
special, I scan it and store it with my own pics.
Warranty paperwork is also scanned and stored with the important papers--at
least until the end of the warranty.
I've got pictures of all my equipment (PC's, Printers, Scanners, Furniture,
TV's, A/V equipment etc) stored with the "important papers" discs. That way
the insurance adjuster will be able to get things done.
If there is ever a fire, I can restore most everything. The reason I don't
want to just copy the whole HD is that if I DO need a new PC because of
theft or fire, I'd want to use the NEW OS--not the one from my old PC.