Um, I'm not quite sure. Some files Windows won't let you copy if they are loaded from the partition you booted off of. Like your IO.SYS file, your Kernel, your DETLOG.TXT (just examples). Some of the files microsoft doesn't want you to copy, and some are essential for controlling hardware and won't allow themselves to be messed with; they'll say "The file cannot be renamed or moved, the specified file is in use by Windows or active in memory" something to that nature.
You may however, be able to do this from pure DOS mode or if you boot of Windows 98 startup disk. Because in this sense, your windows files are not loaded (you're not working out of Windows, you are working out of DOS).
Some of those files are the basis of your PC, and ingrained in there, I'm not sure you can move the. Also, I don't know if you could copy the boot sector or system area (the area before the data area) of your partition.
I suppose you could try from DOS mode, but I wouldn't rely on it as backup (more of an experiment to see if it works).
There are programs that are designed for this like Ghost something or nother software (Clone, Nero even has it's only little HDD backup option).
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