Hello Bikengen, and welcome to Seven Forums.
System sounds like it would either be your OEM Recovery partition (most likely), or the 100 MB System Reserved partition created during the installation of Windows 7. Either way, you would not want to have System Protection turned on for this drive/partition.
It depends on how old the restore points are, and how much maximum disk space
you have allocated for restore points. As space fills up, older restore points will be deleted to make room for new ones.
By default in Windows 7, System Restore creates a scheduled restore point only if no other restore points have been created in the last 7 days, and before significant system events such as a program or driver installation.
You can make changes to the scheduled tasks for this using this tutorial below. It's the same in Windows 7.
System Restore Task - Change Automatic Restore Point Schedule - Vista Forums
Hope this helps,