I have installed on my computer O&O DiskImage. So now I've been studying Help section of this software. However, still some things are vaque for me. I'd like to make an image just of my settings and installed programs (third party apps) from my primary HD (C). I know there is some option that allows me to choose certain folders to be a PART of a disk image but I don't know which ones to choose so my computer settings and programs would have been kept.
Should have been chosen installation folders (Program Files, Program Files (X86) in the root of drive C to retain my third party apps ? Really don't know. What to select then to KEEP my computer settings ?...
Anyway, I wouldn't even mind to make a disk image of my all data 370 GB to avoid that hassle. But my concern is: am I thinking right ? Let me put it that way.
Let's say my hard drive has gotten down. After reformatting/or BUYING and installing a new hard drive I had installed OS from my OS Windows Installation CD. Once installation of OS has been completed, then I connect my external HD on which is backed up my last disk image of 370 GB data. And then I restore my system to the previous healthy state from the mentioned disk image. Am I thinking right ? Or not ?

What is a "Rescue CD" creation option including with a disk image software ? What is this for ? Is this the same maybe what OS Windows Installation CD ? This one is vaque for me too.
As you can SEE, guys, there's some confusion going through my head about this subject.

Would anybody place some brief explanation about this subject in layman's language , please ?

I would be really appreciated.

Thanks.Create separate partition for the data which is probably most of the 370GB. Then image C-Drive (OS & installed apps) which will be 10-20GB. Then backup Data partition separately.