The only problem I see with this approach is that you need an extra 116GB storage for your image files. Windows XP Media Center comes on a DVD, it's got allot of extras, my Windows XP Media Center image file is 3.9GB in size regardless of the size of the partition, because the utility I use compresses it and only images allocated sectors, not including un-allocated sectors like dd. When I remove all the videos and music that Media Center installs, the image is 2GB. Which means it can be stored on a single DVD, which is a hell of allot cheaper than another hard drive, and even if you do have an extra hard drive or allot of space, in the event of a major power spike, or whatever, when your hard drive fails (which happens on new computers also), your backup is history, which means, that is not a good backup strategy.
I create my images of a fresh install after fully updating it and configuring, before installing applications that did not come with the OS, applications and a copy of the images are stored in the data partition and easily reinstalled when needed, not as part of the image (you all know what happens to Windows when you bloat it). There's no sense making an image with Office 2003 installed, you could easily come across a copy of Office 2007 later on which is what you'd probably prefer to install.
The utility I use does have a 4GB file size limit for the images and will create as many as required, the file size limit in Fat32 is 4GB. When you restore the image you only point to the first file and it restores the whole shebang if all the files are in the same directory. To this day, Windows Media Center produces the largest image, larger than Vista Ultimate. My default installations of Linux are around 1.5GB. And the utility will burn it to disk during imaging if you want, if the image requires more than one CD/DVD, it will tell you to put another in when the first is full and label them for restoration purposes. It can put the image in an External USB drive etc. etc. etc.
Best of all, it is GUI dos based (easy), it's imaging feature of the many features it has can be used from a floppy or CD for FREE!
It is called bootitng