"I have window 7 32bit and I setup a backup on a external hard drive by using the backup and restore feature."
What's not clear is what you used to make the backup with. If you used the laptop with XP on it, then it may be in the lap of the gods. I guess you won't know untill you try to restore.
It's a bit late now but as buzznut said you should have used Windows ETW. The ETW would have saved not only your files, but all your settings as well.
The second thing, there was no need to format the drive first as Windows would have put the previous instalation all in one folder called Windows.old, from which your files could have been recovered.
Good luck with it.