You are right, XP has some system backup options but I wouldn´t call them perfectly usable. For example restore points are unreliable - they can get deleted if system runs out of free space, they can get corrupted etc. and I believe they are useless when the system won´t boot or if it´s attacked by some malware (correct me if I am wrong). I once needed to go back to restore point I had created before but it wasn´t there, it just disappeared.

Another option would be to use NTBackup and backup the whole registry. It could work but I have no experience with this so I don´t know if it´s bullet proof method. But I am exploring this option right now. (I wish I had one more computer just for testing.)

As for the malware and Windows deteoriation that´s exactly why I mentioned disk imaging because it´s the most reliable solution for these problems. It´s almost like reinstalling your system from scratch except that all your settings and software will be there. The drive will be completely overwritten by the data from image so any malware gets deleted. Those disk imaging programs work even if Windows won´t boot.

If your system is slowing down over time you can just choose one of the early images (from your archive) that contains data describing how your system once was (fast and clean) and get back to it.

As far as I know Windows doesn´t slow down by itself. It is caused by installing and uninstalling applications, changing drivers, malware etc. If you use the same system with your main well written applications, without any "registry cleaners", without installing and uninstalling anything new, without browsing web, if you defragment the drives on a regular basis etc. then the system will be like new all the time. But that´s not always possible. That´s why it´s good to have disk image and to be able to restore the system.

Of course you have to plan in advance and decide what the image should contain (what are your main applications, how will you set up them and what can be excluded, which drivers are proven etc.).