To create a system repair disc
1. Open Backup and Restore by clicking the Start button Picture of the Start button, clicking Control Panel, clicking System and Maintenance, and then clicking Backup and Restore.
2. In the left pane, click Create a system repair disc, and then follow the steps. Administrator permission required If you're prompted for an administrator password or confirmation, type the password or provide confirmation.
Source:
http://windows.microsoft.com/en-us/windows7/create-a-system-repair-disc
How to create a system image:
http://www.wikihow.com/Create-a-Recovery-Disc-in-Windows-7