Hello Wyzo, and welcome to th Windows Seven Forums.
32 Bit (x86) - You use this when you have 4GB of RAM or less.
64 Bit (x64) - This is for a computer running over 4GB of RAM - this can still be installed on a System with Over 4GB of RAM, but it will only show and use 4GB
To check how much RAM you have, go to Control Panel/System.
on the cd it said w7u x86 x64
- I think that means it can install 32 or 64 Bit depending on what you select
If you want 64 Bit OS, and you do not have enough RAM, you will need to get more.
This will tell you your current OS too.
Explain in more detail what you mean about the Backup situation. Windows 7 Universal Installation Disc - Create
This link may help, there are plenty of tutorials out there on how to install Windows 7.