Practically all the veterans here have already figured out how to do this. The purpose here is to have an extremely simple way for those without much experience to get going in windows 7 with all their current settings from windows XP. This works with Vista as well, in fact ITS THE EXACT SAME PROCESS.
Requirements:
1) Windows 7 x86 (RC1, any other build, Retail)
2) Windows 7 x64 (RC1, any other build, Retail)
3) 2nd HDD with AT LEAST the same amount of space as your C:\ (external or internal)
4) Destination computer with HDD with AT LEAST the same amount of space as your C:\
5) 3rd Spare HDD or blank media such as CDs, DVDs or USB's to back up your important files JUST IN CASE!
5) Patience
Steps:
1) Backup ALL your important files BEFORE we begin, to a Spare HDD or CDs, DVDs, or USBs
2) Insert Win7 x86 DVD (or Vista x86), close the installation wizard if it comes up
3) Go to My Computer > right click the dvd drive> Explore
4) Make your way to the folder Support > MigWiz and run migsetup.exe. This will start the Windows Easy Transfer Wizard.
5) Follow the prompts and choose what you would like to backup for each User Account. At this time you can also selectively choose which files and folders you would like to backup by clicking Cuztomize just under the User Account name.
6) Once you are done selecting what you would like to transfer, click next and let the computer sit for the new couple hours. Select the 2nd HDD where the Tranfer File will be saved to, give it a name. It will tell you approx how long it should take.
TIP: You can easily uncheck items that you dont want to transfer to your new Windows, which will also help in reducing the size of the transfer file size. This also in turns means that you can see to it that everything can fit your new drive if its size is smaller than your current drive.
NOTE: If using an Internal for the 2nd HDD to store the Easy Transfer File, you will need to remove it from your main computer and place it into your new computer.
7) Once the process has completed go on to your new computer where you have Windows 7 (x86 or 64bit, the same goes for Vista x64 ONLY). At this point PLEASE ENSURE that the primary HDD thats running Windows 7 has at least the same amount of space that your Old Win XP did.
8) Navigate to where you stored the Easy Transfer File on the 2nd HDD, and double click it. Alternatively you can look for Windows Easy Transfer in the start menu and go thru the wizard. Either way it will bring you to the same screen.
9) Everything should look familiar to you by this point, again you have the option of customizing what you WANT TO transfer from the image.
TIP: Check the Advanced Options link UNDER the next button, click on the 2nd tab to see whether your Restored Files and Setting will fit on the primary drive. Files taken from your primary XP HDD can ONLY be restored to the primary HDD in Win7/Vista. Other files from other drives can be restored anywhere.
10) Click next and watch as your environment transforms to reflect the icon positions, favourites, mail etc from your XP install. Be sure to review the list of programs you will definitely need to reinstall ESPECIALLY if you are transferring to the x64 Win7/Vista.
If you followed all the steps you should be good to go. Feel free to ask me anything if something is not clear
Happy upgrading (although everyone including myself recommends a clean fresh start anyway)