Here's my checklist for re-doing a computer:
1. Backup what's there. Most users don't even know what "back up" means. If you can't boot the computer, consider buying a new hard disk to install the OS onto. You can mount the old hard disk afterwards and copy data from it.
2. Collect all the driver disks, install packages, etc. you can find and have them ready. You should have invested in a BOX or drawer specifically to keep it all in.
3. Partition the hard disk. Run FDISK (or equivalent) and make yourself a "boot" partition, and a "data" partition. C: and D:, as a minimum. This will save your butt later. About 25% for C:, 75% for D:.
Powerquest PartitionMagic and DriveImage are my preferred disk management and backup solutions. More on these later.
4. Install your OS to the "boot" partition (or drive). Feed it all the drivers it needs. Get it up and running.
5. BACK UP THE BOOT PARTITION. DriveImage (or equivalent software) will back your boot drive to another partition or another hard disk. SAVE what you have done now.
6. Install all the other junk. Take special care to ensure your "My Documents" (or home) folder, and other work, download, etc. folders is on the OTHER (D

partition or physical volume from the booting one. Spend hours and hours, then days and days on this. If you screw it up, just restore to the point where the OS was fresh and start over. When you are happy with what you have...
7. BACK UP THE BOOT PARTITION. DriveImage (or equivalent software) will back your boot drive to another partition or another hard disk. SAVE what you have done now. A different file name.
8. Your computer is "good to go". You should invest in a USB2 or Firewire hard disk to perform backups of your work to.
9. When you make important or significant changes to the OS, back it up again. That USB drive is also very good for backing up those drive images of the the boot partition. A complete system backup takes about 5 minutes for me to USB HDD.
10. When something goes "horribly wrong", restore the backed up boot partition image over the top of Windows. If you've been keeping up your incremental backups, and boot image backups, you will not have lost anything significant. The next round of recovery when windows melts down will take *five minutes* because you planned ahead. It will literally be easier to overwrite your boot partition than to figure out what broke.