The i386 folder contains only the system files for XP so copying it won't backup your personal data (pics, docs, music, etc...). You want to create an automated system recovery CD. Click Start, Accesories, Backup, Advanced Mode, Automated Recovery Wizard.
I have the Home Edition of XP, which does not come with ASR. And my laptop did not come with an install CD. HELP says I can do a recovery with the Install CD. How can I make one from i386??