If you really want a good HDD setup, here's what I would do:
First move all your media and personal files to an external drive and delete the windows.old file if you still have it.. your system partition has expanded to 99 gb used and you need to shrink that if you want to have a good image backup that isn't taking up a significant portion of your HDD, or better yet simply reinstall windows after using the windows install disk to resize your partitions.. it would be a minor and temporary inconvenience but better in the long run if you wiped your system and started new
Otherwise, at least do a disk cleanup, getting rid of all restore points, temp files, shadow copies, old backups and the like. Disable hibernation too. that frees up at least a couple GBs.
When you're done, defrag your HDD using
jkDefrag. All downloads links from my posts are for freeware that really is free (not some limited trial version)
Download
uNetBootin and use it to install gparted on a flash drive. uNetbootin will download gparted if you select it from the dropdown menu at the top of the application.
Follow the instructions and reboot from the usb drive
The UI for gparted is simple and should require no instruction, although I would warn you not to try moving partitions with it as that can end up taking a few hours, just erase all the partitions if you're reinstalling windows or shrink your system partition after you've cleaned it up, leaving about 20-30 GB free space. Erase the other two partitions and use the resultant unallocated space to create a media partition (don't erase the system reserved or the OS partition unless you're willing to start with a fresh install of windows)
The best way I've found to configure a system with a single HDD is to have a relatively small partition for the OS and applications with the resultant free space going to a 2nd partition for media, documents and your backup. Make sure you format the partitions to NTFS.
In your case, I would suggest 60-75 GB for the system partition. If something goes haywire later on, you won't lose any of your music, pictures or documents if you have to reinstall windows..
You're not going to be able to create an automatic restore partition without having to pay for it.. I've tried that already. But if you think for a few seconds you'll see the advantage in my setup.. your OS and programs become expendable if all your personal files, program installers, music, etc is on separate partition.. Windows 7 ultimate, COD4 MW2, Dragon age origins, office 2010, and a few small apps take up a total of 52Gb on one of my systems. That's more than many people have but still small enough to make a reasonably quick backup of my system image. I wouldn't want my 328 GB music collection going into a backup image.. That would take all week.. good luck