<<...what l really want to do is backup the complete system. In the event of a crash and a total rebuild is required, l just want to insert a disk, it boots up, and away it goes.>>
From what I read (and interpreted)...what you really need to do is clone your system partition...onto another hard drive.
When problems arise, you just remove one drive and insert the other.
EASEUS Partition Master is a magic partition manager software for Windows 2000-XP-Vista-2003- - http://www.partition-tool.com/
<<My original system was Windows 98 and a while ago now, l bought the XP home UPGRADE disk and all is working fine.>>
You can do a clean install from the upgrade version of XP...see following link: Clean Install Procedure with Illustrative Screen Captures - http://www.theeldergeek.com/xp_home_install_-_graphic.htm
<<Now another site is telling me that l need to reformat my hard drive, install W 98, re-apply the upgrade disk and download all MS upgrades?>>
It's not necessary to reinstall the former operating system (Win 9x) when doing a clean install from an upgrade version of XP. It is necessary to have the system recognize that a qualifying product is owned/possessed. In such case, any install CD reflecting Win 98 would do. Many computer shops (and persons) have access to such today.
<<Well l didn't give these guys my W 98 disks so how did they do it?>>
I think I just covered that...there's no magic involved, IMO.
<<Is this Upgrade disk actually worth anything in restoring a system then?>>
If that is a Microsoft upgrade version of XP, complete with valid license...that is your authorization for installing XP. That CD contains all the files necessary to do a clean install or a repair install of XP Home.
FWIW: Anytime a user does a repair install...that is less than the same SP-level that the system currently reflects...the user will have to reinstall all critical updates which were not included on the CD used to do the repair install. If I have my system at SP3 and I use a CD reflecting only SP1...to do a repair install...I will have over 100 critical updates I need to reinstall.