Now you're ready to restore your data. Luckily, thanks to the above-mentioned C:\Windows.old folder, this is actually pretty easy. Select Start, type C:\users, and press ENTER. If you don't already have the c:\windows.old\users (or c:\windows.old\documents and settings) folder open, open it now.
At this point, you have two Explorer windows open. The windows.old one, which I'll refer to as the source, contains your data. The C:\users window, which I'll call the target, is where your data should end up. Do the following for each folder named for a person who uses your PC:
Open the respective folders in each Explorer window (so that the source window is open to C:\Windows.old\Users\yourname and the target to C:\Users\yourname). Make sure that hidden folders are truly hidden. If you see an AppData folder in the target, select Organize, Folder and search options. Click the View tab. Select Don't show hidden files, folders, or drives, and click OK. (You can change it back later.) Drag all the folders--but not the individual files--from the source to the target. You'll get a lot of questions as the files move. When Windows tells you that you need administrator permission, make sure Do this for all current items is checked and click Continue. If told that "The destination already contains a folder named...", check Do this for all current items and click Yes. And if told that there's already a file with the same name, check Do this for the next nn conflicts and click Move and Replace.
Windows XP keeps pictures, music, and videos inside folders within My Documents, while Vista and 7 store them separately. You'd expect that to cause problems, but Windows 7 is smart enough to put everything in the right place.
When you're done with the user folders, repeat those steps one more time for the Public folders. If you upgraded from XP, your source won't have a Public folder, but it will have a shared folder, and you should move the folders from there to the target's Public folder.
At this point, Windows is ready to use. But keep the Windows.old folder around for a few months. There may still be something important inside--especially in the hidden AppData or Applications Data folder.
If you didn't enter your product ID and activate Windows 7 during the installation, now would be the time to do it. Select Start, type activate, and press Enter. Click Activate Windows online now and follow the prompts.
At this point, all you ex-Vista users should check out "3 Key Tweaks for Windows 7" for suggestions on retrieving some Vista features that might actually be missed.
One last suggestion: Once Windows 7 is set up the way you like it, create another image backup, and keep this one as long as you have the PC. That way, should you ever need to reinstall Windows, you can simply restore the image and skip several steps.
For more of PCW's Windows 7 coverage, read our in-depth Windows 7 review, and read how we tested Windows 7. And for ongoing information about Windows 7, sign up for PC World's Windows News and Tips newsletter.