What is difference between Backup now, and Create a system image?

On the Backup and Restore page, it lists the two Thread title options?-

I read that you can't restore individual files from system image, but I'm wondering if I need to create both in order to do an emergency system restore using boot disc/or... (D: drive)?

"Backup Now" will create a backup as specified in "Change Settings". If you "let windows choose" you will create a file/folder backup of your personal files AND a system image. I recommend "let me choose" and generally select the default files/folders but uncheck the create a system image box.

"Create a system Image" will create a system image only to a partition you nominate. I think it is best to make images on a needs basis using this option. You can definitely restore individual files from a system image.
http://www.sevenforums.com/tutorials/24771-system-image-extract-files-using-disk-management.html