What your seeing is space being taken up by both "Restore Points" and "Previous Versions" of files - both of which are stored in the same folder.
"Previous Version" file copies get made regularly by default in Win7.
1) For some manufacturers (Dell) you can get a tool from them to burn your system restore data to a DVD. For others, you may look into creating a bootable cd using a tool like BartPE, VistaPE, or another generic rescue disk maker. I personally use BartPE, it was quite easy to use.
2) System restore points can't be put onto a disk, from vista on, the computer uses what's called "Shadow Copies" (it doesn't really delete things when you make changes, it just deletes the header, but keeps track of the old file). Since it doesn't actually have a block of old files laying around, there's nothing to move to CD.
3) If you need to import a registry backup into a corrupted install you can use a win7 disk you borrow from someone else, or you can use a rescue disk like BartPE or whatever - they almost univerally have registry editors included.
4) to use restore points from a boot scenario, you need a windows 7 DVD. Once you boot up from the CD, just hit "repair" instead of "install" and then select the option about restore points. I think it's called "roll my system back" or something similar.
Post Script - If you're not able to burn a windows 7 disc from your rescue files on the computer, try calling up their tech support and telling them your partitions got messed up or something similar and so you lost the rescue data. Ask them to mail you a restore DVD, it's a hell of a lot cheaper than sending a tech out, so they'll usually do it.
Best Answer
You should be able to use the registry. Under
HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows NTcreate a new key called SystemRestore (if one isn't already there), below that key create a new DWORD value called DisableConfig and set it to 1.