It depends. What are you trying to back up? You can certainly back up and restore documents. You can also back up and restore many settings. Windows XP comes with a tool called Files and Settings Transfer Wizard that'll do a lot of the job for you automatically. There are also a handful of third-party tools that do similar things, but the Files and Settings Transfer Wizard is free. Read KB article Q306187 for a good tutorial on using it.
If you're an administrator looking for an automated method for backing up and restoring settings for a lot of users, then Files and Settings Transfer Wizard isn't the tool you want to use. Instead, you want to use the User State Migration Tool. This tool comes with Windows XP in the SupportTools folder on the Windows XP CD. You'll find documentation in the folder along with the tool.
This was first published in October 2002