WHEW! I dodged a bullet!
A while back, I bought an external hard drive. I backed up my PC to this drive and reformatted my old one (it was time for a fresh install).
Just after installing Windows XP on the freshly formatted drives, I accidentally DROPPED my external drive while it was running!! I knocked it off of my other PC. Something in side the drive broke, I'm not sure what.
Needless to say, this presented a huge problem. I didn't want to pay tons of money to have my broken hard drive taken apart and have the files recovered. I got some recovery software from a friend of mine and it seems to have recovered about 99% of the files I needed fully intact.
The main thing I was concerned about was the pics of Little Dif that I had stored. I had backed those up before to CD somewhere before but it had been a while. I don't like to rely on CD's for long term storage anyway. They are unreliable.
Here's my advice: Go buy yourself a USB hard drive enclosure. Back everything up and remove the drive from the enclosure and keep it in a safe place. Feel free to get another drive and use it as additional storage, especially if you have a laptop but do not use your backup drive for everyday use.
Even better! Buy two drives, get a safe deposit box at the bank. Once a month, swap drives and make a new back up. It's always best to do incremental backups though so you never really delete anything.
No matter what you do, or how you do it, ***PERFORM REGULAR BACKUPS***