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A systems image backup is "an exact copy of a drive," Microsoft explains here:
By default, a system image includes the drives required for Windows to run. It also includes Windows and your system settings, programs, and files. You can use a system image to restore the contents of your computer if your hard disk or computer ever stops working. When you restore your computer from a system image, it's a complete restoration—you can't choose individual items to restore, and all of your current programs, system settings, and files are replaced with the contents of the system image.
This page explains how to create a systems image backup in Windows 7.