Funny you should start this thread tonight, Paul, I just spent two hours recovering from my first hard drive failure in almost four years.
However, after the last one, I started to take precautions:
(1.) Keeping all documents, files and photos on a second internal hard drive, not on the drive with the WinXp OS.
(2.) Using Acronis True Image to create regularly an Image of the hard drive with the OS on it to an external backup drive connected through USB.
(3.) Using MS SyncToy to duplicate regularly all files, documents and photos on the second internal hard drive also onto the external USB backup drive.
It paid off: even though I had not backed up the operating system drive (the one that failed) for four weeks, I lost very little -- a few new programs which can be installed, browser bookmarks, etc. and back up and running very quickly.

The moral to the story. Backup and backup frequently.