The backup program in Windows XP is useful, and does generally work. However it's going to take a bit to script it up, and it will never be really fire and forget. Since it's a traditional "scan the entire drive for changes" backup, it will have a noticeable impact on performance while it is running.

Also, Backup can only cleanly restore the entire machine if it is Windows XP Pro. Windows XP Home offers no ability to recover the entire system when the system has no OS, but it can restore once you do a clean install of XP. More info is here