|Windows 7 has the built in tools to do the back up for you, you just need a good reliable drive to put it on whether internal or external. If you just wanted to keep a back up of your personal files, that is the regular back up and when you say 'everything including Windows' you would need a complete image of the hard drive. In your case I would recommend doing both of these AND making a Windows 7 Repair Disk also which will allow you to do all kinds of repairs like a start up repair, a system restore (when you cannot access the internal restore or it is not functioning) and even reinstall that image.|
Control Panel>System Security>Back Up Your System
Do not use external programs for back up. If you ever have a complete drive failure, you would first have to reinstall Windows, then reinstall the back up program, then do your restore, or possibly find the back up program's install/recovery disk (assuming you have it or can get a copy still) to help load the back up copy. Windows features are always there and MS is not going anywhere.
You have to be a little bit crazy to keep you from going insane.