How it Works
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Windows XP makes it easier to wipe out problems if they occur in your system. You can use System Restore to remove any system changes that were made since the last time you remember your computer working correctly. System Restore does not affect your personal data files (such as Microsoft Word documents, browsing history, drawings, favorites, or e–mail) so you won't lose changes made to these files. System Restore won't touch any files you've stored in the My Documents folder. It swears it won't touch any of your other data files, either. But to be on the safe side, keep your most savored data in the My Documents folder.

It is by no means a complete backup but it will restore critical system files as well as those that were changed.

 
Windows XP creates different types of restore points and names them System Checkpoint
 
Initial System checkpoint - This restore point is created the first time you start your computer after you upgrade to Windows XP. If you choose to revert to this restore point, System Restore will restore your computer to the state it was at that time.  
System checkpoint / Scheduled Restore point - System Restore automatically creates restore points every 10 hours that your computer is turned on, or alternatively every 24 hours of calendar time. If your computer is turned off for more than 24 hours, a restore point will be created the next time you switch it on.  
Program name installation restore point - This is created when you install a piece of software using an installer like InstallShield or Windows XP Installer. This is handy if you need to restore your computer to the way it was before an installation. If the program you're installing doesn't use one of these installers, and you wish to restore your computer to the way it was before the installation, use a scheduled or manual restore point instead.  
Automatic update restore point - This is created if you receive automatic downloaded updates, once the update has been downloaded and before it is installed.  
Unsigned device driver restore point - This is created if Windows XP detects that you are installing a driver that has not been certified by the Windows Hardware Quality Labs.  
Manually created restore point - This is a restore point that you create yourself using the System Restore Wizard.  
Restore operation restore point - This is created each time you perform a restoration, and can be used if you wish to undo a restoration.      


When you run System Restore, a calendar is displayed to help you find restore points. If you don't use your computer every day, some days might not have any restore points. If you use your computer frequently, you might have restore points almost every day, and some days might have several restore points.

Finally, System Restore consumes about 12 percent of your hard drive space. When it reaches that limit it will start deleting Restore Points starting with the oldest to make room for new ones. It's Camtech's opinion that it is far too much and unnecessary. To adjust how much space it uses, see Saving Disk Space