Backing up data simply backs up whatever you choose, such as Firefox settings or your music collection, to another source (on-line, discs, other drives, etc).
An image is an exact compressed copy of everything on your selected hard drive (or partition). It is rather large (depending on the size of your drive), and is usually stored on another (external) hard drive.
Depending on how severe the crash is, you may not even need to do anything at all, if it was just random and temporary. System Restore should work fine for many crashes, but it only restores vital parts of the system. A drive image will completely restore your computer to its previous state.
If you cannot start your pc, then you will need to use the boot disc provided by the drive imaging program (usually). The top pick, Macrium Reflect, will ask you to burn the boot disc data onto a blank disc. Using it is simple, you just browse to your image, select it, and choose which drive/partition to replace.
When using disk images, sometimes they can corrupt, so make sure to verify it right after making one.
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