I found this in a few different places around the 'net - hopefully it's helpful:

Turn Off System Restore to Save Space

By default, Windows XP keeps a backup of system files in the System Volume Information folder. This can eat up valuable space on your hard drive. If you don't want Windows to back up your system files:

  • Open the Control Panel.
  • Double-click on System.
  • Click the System Restore tab.
  • Check "Turn off System Restore on all drives".
  • Hit Apply.
  • You may now delete the System Volume Information folder.

Warning! If you turn this off you will not be able to use Windows System Restore to restore your system in case of failure.

Its always good to have 1 backup in your system restore folder JUST IN CASE YOU NEED IT!! Just blindly disabling this option may prove to be VERY BAD.......Rather set it to only save 1 restore point (And every day it backs up the prev day and deletes the last one)

how about putting it on cds?huh??

YA i suppose you could do that :)

Its because system restore by default is set to earmark like 10% of your disk and with 200gbish disks becoming common, that means a lot of space is wasted. I usually lower mine to like 3%

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