This doesn't really belong in "Crashes and Debugging" forum.
Yes, it basically shoves everything from the original install into the Windows.old directory prior to installing the new Windows. I've personally had varying success with just moving things over from the Windows.old directory to the new created directories, but often times it works out very well. Just make sure to not copy over whatever bugged out your system and required you to reinstall Windows in the first place.
Details on the whole thing are mentioned in the tutorial here