Yes. Another internal or external. You cannot save an image file to any partition contained in the image file.
Optical disks as backup are ultimately more expensive than hard drive space and are not as reliable.
As far as dust goes, you can seriously reduce dust by keeping your PC 2 or 3 feet off the floor and by sealing off any unnecessary entry spots for dust. It may be that you don't need all of those fans and that they are just entry spots for dust. Experiment with turning a fan off and seeing if your temps are still acceptable. If so, consider removing the fan and sealing the opening.
Windows built-in imaging works fair, but is cranky and not easily understood. Macrium or Acronis are more flexible and simpler to use.