i am doing a back up of my computer to an external hard drive for the first time ever,my question is this,after i complete this,if i was forced to put my laptop back to factory settings,do i just attach the external hard drive to it and copy and paste the files to the laptop,or is there a special tool,eg system restore or something to do this,and after i do this will it include my windows updates,passwords that were stored and wi fi settings etc?
Partly depends on how you are making the backup, though I use Win7 too, I use Acronis to create my Full Backups which are saved to an external drive. I would not expect to have the need to revert to factory settings, if any big problems I could simply restore my complete hard-drive from my latest backup.
Acronis full backups do include everything on your hard drive.
I have not used the built-in Win7 backup system, so cannot comment on that.