Before continuing, it's a good idea to create a bootable restore disc, just in case you need to actually use the disk image to restore your computer someday.
This ability was completely lacking in Vista, leaving many folks scratching their heads wondering how to create a bootable disk in order to use the backups they were able to create. Oddly, this capability was removed from Vista sometime during the beta period. In Windows 7, it's back.
To create your bootable repair disc, go back to the Backup and Restore Center and click "Create a system repair disc" in the left-hand column. Be sure you have a writable CD or DVD in the drive, and then make sure it's showing your drive and click "Create disc."
A default installation of Windows 7, by the way, comes with a bootable emergency repair disc image on the hard drive. If Windows Backup finds it, it will use it and the process will be relatively quick. If the image is not found, it will ask for a Windows 7 install DVD. Be warned.