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02 Nov 2012  

Windows 7x64 Home Premium SP1

You need to understand the difference between
1) File/folders backups and
2) System Images

For File/folder backups you mainly backup your personal data which can include standalone exes and installers etc which you may have downloaded for example but NOT the OS system or installed programs.
To manage these you access "Manage space" from the normal Backup & Restore screen. Here you will see at least one but probably more "Backup Sets". The most recent Backup Set will be incrementally added to when you access "Backup Now" until Windows decides to create a brand new complete backup set. The older Backup Sets are essentially closed and generally I don't see the point in keeping them all and delete the old ones. I keep the current one of course but one or two older sets. This tutorial is useful
Backup User and System Files - Delete Backups

Images store difference images in shadow storage when you make multiple images from within the backup schedule. I personally do not recommend Windows difference imaging and make images one at a time using "Create a System Image". I never create images from within the Backup Schedule. I delete or rename image folders as described in
Backup Complete Computer - Create an Image Backup

Edit: I've seen my old post this elaborates a little on it so I will leave it.
My System SpecsSystem Spec