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When should you create a recovery disk, would you say right after you install the OS or...

If you mean the standard repair disc created from the windows backup menus its just about only a boot cd for booting the comp and replacing some system files if your boot drive goes bad. So you can create it at any time. What you really want to make sure is that you have a separate backup on an external drive or network share. Preferably a bare metal recovery option including a full disc image.

Recovery disks don't do much and shouldn't really be counted on. You should have a two prong approach to recovery. First, you should have a bare-metal clone of your system using something like Acronis TrueImage, Norton Ghost or Paragon Hard Disk Manager. This is a low level copy of your entire drive, all of its contents including your data, and can be imaged back to a bare hard drive and work exactly like the original drive. The best cloning program is one that clones when your hard drive is off-line (not in use) necessitating the booting from external media such as CD/DVD, thumb-drive or external hard drive.

The problem with only relying on cloning is that you don't clone every day which risks data that has recently changed. For this, you need a daily backup routine. There are numerous software backup programs, and some like Paragon and Acronis include both a cloning software and a daily backup software component in one package.

Personally, I really like the fact that Windows 7 builtin backup creates a VHD-clone of your drive, which can then be either mounted as a normal drive, or opening in a good archieve utility like 7-zip. Acronis and other Imaging tools may be better, depending on what you do, but the built in backup/cloning actually isnt a slouch this time around.

My only backup of my former comp is the Windows 7 standard VHD, and I'm really glad I saved that, since not all Steam games keeps the data in the cloud. Namely a bunch of hours of World of Goo saves.