<< Yes, you can do it but to "keep all the data" you have to have your data kept on a different partition. When you restore a image it wipes everything from the partition you are restoring and overwrites it with the image you made previously. This image only contains the data that was on it when it was created, anything that has been added to this partition since then will be overwritten.
I partition my drive with 2 partitions, a "C" partition for my OS and apps, and a "D" partition for my data. I point my "My Docs" and as many other apps to save data to my D partition so the data is stored in one place. I manually backup things like bookmarks about once a week so if I have to re-image I don't lose my latest data. >>
I'm wondering, how big do you make each of the partitions? Also, if you should do a restored on your OS and apps partition (your C🙂 then does that mean all the programs that you've installed on the hd that you originally didn't backup on the CD will have to be reinstalled? Lastly, when you say data, do you mean all the saved word processing docs, spreadsheets, saved games, bookmarks and other non app/program stuff? If so, then the D: partition wouldn't have to be very big since apps/games/programs take the most space.