Many (including me) swear by Acronis True Image. It will backup either complete drives or individual files and do a number of other jobs as well.
The use of a separate drive (external/removable) is essential as it is the only way of ensuring your data is safe when you backup. The constraint is the amount of data you want to backup and the drive you are saving to. ATI does compress data but a bit of extra space is always worthwhile.
I have a second drive in the PC and an external - belt, braces and probably a bit more.