I keep an image on my second partition. I don't use the windows backup and restore feature, but others do and it works fine. You should be able to play with your install as much as you want to test different settings.
But to do a system restore from a previous install, try booting windows cleanly and then doing the restore.
If you need instructions for that,
I need you to reboot windows cleanly. To do that please go to the run command and type in msconfig . Once that starts, select selective startup, and then uncheck the load startup items. Now click on the services tab, and down near the bottom of the window, check the box that says Hide all Microsoft Services now go up and uncheck all the services still listed, make sure you scroll down the list if need to unselect all the non Microsoft services. Now click apply, then click OK and reboot the computer.
To boot normally after, just run msconfig and select normal startup then click apply then OK and reboot.