(I am not the IT crowd or a grown-up) 🙂
External drives are good & so are backups – if you have anything important on your computer (esp laptop since more likely to drop etc ?)
BAckup program – I have used syncback (free, seems to work just fine though a bit fiddly to set up if you don't know your terminology). There's also a thing called synctoy that I think is microsoft's freebie. The main thing seems to be deciding what NOT to back up (mine's got a bigger disc but took about 12hrs to back up, a lot of which wasn't important to me).
With XP you seem to lose all your updates when you reinstall, so end up having to download SP3 again (one reason I took a punt on windows 7). Might be same for Vista ??
If you're only doing it once & not going to back up repeatedly, I guess copy & paste/ drag & drop would do (& maybe work faster) but backup programs make the next times much faster as they only back up files that have changed.