You should be able to use the software associated with your external HD whatever system you have.
I am not familiar with Win7 so cannot comment on what files will be backed up from within Win7.
I have never used the built in software on either of my WD USB drives I have recently bought a 1TB. one, my wife now has my old 350GB one . I use Acronis TrueImage to make a complete backup of my System and Programs to the HD. All my data, video, music etc. is stored on the 1TB external HD in a Backup Folder.
If my system goes pear shaped which it has in the past on a few occasions usually caused by me?? I can restore my system within about 5 hours using the restore facility in TrueImage.
Macrium Reflect is a free program to enable you to make an image file of any thing on your PC including a whole drive but you will need a large external HD to do this.