I can tell you what I have read and done. I have read that using an Upgrade disk for a clean install for an XP machine can be done. If it causes problems for you, take a look here:
As far as the backup goes, I installed the Windows 7 Home Premium on an IDE drive because that was the spare I had. Later, I bought a new SATA drive and cloned the IDE install to the SATA. As far as the OS was concerned, it behaved as though it had been on the SATA. Just make sure you clone the whole disk. That means the special data partition AND the main body of the OS. If you have used cloning software before then you know that Windows uses two partitions for an install. Make sure it is activated and is good before running the clone software.
I have not used an SSD but it should not make a difference IMHO.
Currently I'm running a valid copy of XP and am considering upgrading W7. I've also recently upgraded my MOBO and processor (i7 920) and had to reload XP. I've reloaded XP so many times I'm surprised the CD hasn't worn out. All of those reloads have never been an issue, regardless of HDD configurations, PCI cards, etc. I've read here and there that W7 won't allow a reload, or that 'activating' it becomes a real hassle after reload or hardware changes. So I have a couple of questions:
1) If I buy an upgrade copy of W7 and do a fresh install, is it only good for the one install (HDD crash, hardware change, etc.)?
2) Can I make a back-up image of my W7 installation and reload it as many times as necessary (HDD crash, etc.)?
3) I'm considering upgrading to an SSD to run the OS and use my HDDs for file storage. If I load W7 onto my current HDD, can I make a back-up image of the installation and blow it onto my new SSD?
I understand that there are certain files that Windows looks for on boot-up, and I've done a decent job of copying/modifying them with XP so Windows will boot to the drive I want, but is W7 locked down to the point where these files (or other files) can't be copied/modified, or even backed up?
Thanks for all your help!