Boot to an IDE drive that is mirrored either with Logical Disk Manager (dynamic disks) or hardware mirroring. Of the two, hardware mirroring is preferable. ATA RAID cards are not that expensive and you get better performance and fault response. Put the data (and the paging file) on a SCSI RAID array (mirrored or RAID 5). Use a hardware RAID controller. As fast as ATA drives have become, SCSI is still the technology of choice for a server because of its multithreaded messaging design. As for backup, both Ntbackup that comes with the OS and any of the popular backup programs will backup the OS. If you ever need to recover, you can reinstall a bare OS then run the tape restore over the top of the system partition. The commercial products all have emergency restores that will automate this process.
This was first published in October 2001