TIM,

I assume your winRE partition contains an image of your OS taken at the time it left the factory. So if you don't want to nuke every change you have made to Win7 since your computer arrived, don't use the contained image. If it was my computer I'd move the booting files to Win7, delete the partition and use the space for something else. Another OS for example. Ubuntu 11.10 is being released tomorrow.

That's just me. I identify with the comment, "I do things to my computer, not with my computer".

Yes, Ghost will ask you to backup this partition as it contains the booting files (System, Active) but it only needs to be backed up once. By the way, please change the label of your E: drive to something other than "System". You don't want to confuse it with the Win7 partition when you are in a WinPE and the C: and E: drive letters refer to something else.