Well, there’s no easy way around this is you’re dealing with individuals. In a business setting - where everyone has the same OS, same office suite, etc. - it’s easy to just image the computers when there’s some kind of software problem. In my example above (about using the hacked Win98 disk to re-install Windows at one of my former jobs), we had a huge file server that stored the user’s “My Documents” and used Exchange for email. So in this case, it was almost always more efficient to simply reimage the machine than troubleshoot a software problem - just copy the Desktop and Favorites folders up to the server, reimage and copy everything back down… 20 minutes tops.
Of course, it’s a whole different ballgame if you’re dealing with individuals. People have a huge array of programs and a seemingly unlimited array of places to store “crucial” data. For instances like these, I’d normally ghost the failing image to either a separate hard disk or to a server. This way you can easily wipe the machine and not worry about losing anything. I normally ghosted their drive to an image file, which I’d burn to CD or copy to the “fresh” partition after the reinstall was done. This way you’re covered from the occasional “freak” that stores all his documents in c:\Program Files\Winzip for some reason. Ghost comes with an accessory app called Ghost Explorer that gives you a Windows-Explorer like interface to extract any files you want out of the image.
As far as restoring their applications, the Recovery Disk should do that for some apps, but you SHOULD NOT install any application for which they cannot provide the original disk and/or license. Yes, they’ll complain, but you’ll have to explain to them that you’re not going to open yourself up to fines from the BSA for installing software you cannot confirm that they have a license for. Lord knows how many times I’ve been yelled at for this, but I’ve never budged. It wasn’t my company’s business to own copies of every software program made, so if you can’t find your WordPerfect 4 disk… sorry.
If you have an IT business, you should have your own “generic” copies of Win98 and XP that you can install on their computers. As I said, MS doesn’t care as long as they have a license. People would bring in their PCs all the time to my former job and we’d reinstall XP or 98 using our own OEM disks, provided they could prove that they had the license - which most of the time was conveniently stickered to the side of the PC. Most of these installs used “super” or “slipstreamed” CDs that already had all the updates on the CD or actually merged into the installation media, so that when setup was done they already had XP SP1 installed. Then we’d just snag the latest updates and be done with it.
Lastly, it’s probably not a good idea to move their data to a different partition on the same disk when doing a restore. Some recovery CDs - Compaq for one - delete ALL partitions on the disk and redo the drive as if from scratch.
As for why the PCs don’t ship with actual OS CDs, technically you can blame MS, but that’s only because of eBay. MS changed their agreements with the biggest OEMs - Dell, Compaq, Gateway, HP, etc. - to ship PCs with restore CDs only. This was because of a flood of OEM CDs showing up on eBay, at computer shows, etc. As you probably know, an OEM copy of Windows (any flavor) costs a fraction of what a retail one does, so MS was losing money. I should know - I bought my OEM copy of NT 4 back in the day - complete with SP3 CD and boot floppies - for $30 off eBay.
Have you considered an MS Action Pack? It’s like $299 and includes Windows XP, Windows 2003 Server, Exchange, and just about every other piece of software MS makes. With a hack to the SETUPP.INI file, you can make XP accept a particular CD key - retail, OEM, VLK, etc. Very useful for doing reinstalls for customers.