If XP, post in the XP forum.
As to loss, we only lose what we don't backup. Also, if this machine has suffered some virus/other damage then it's anyone's guess if the files will survive.
Remember that XP and today's "programs" are designed to thwart backup and restore. No need to complain to me about this. If you wipe the OS, then "programs" are designed to fail on restore.
Are you sure you need to do this?
Bob
Backup Situation and Overhaul
Current Setup:
single 80-gig FAT32 internal HD (desktop)
Want to:
Install a second 120-gig internal HD and move ALL personal documents and files to the new drive while re-formatting the original 80-gig HD to just run the OS system (XP). I would also like to setup and install an external 80-gig HD for backup purposes of essential document, files, programs.
Questions:
The current drive and the two new drives (internal 120-gig and external 80-gig) are ALL FAT32. Should I convert the drives from FAT32 to NTFS? If so, why and what are the drawbacks and benefits?
When I begin the transfer process and re-formatting the drive(s) what are the essential folder/files besides the "my documents" that I need to backup so I don't lose the essentials that can not be replaced? What folders/files do I need to find and save so the users information/settings are not lost? Where should program files be stored when using this setup?
What's the best way to proceed with this project?
Thanks for all your assistance and support information.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic