Yes, as far as I know, home will have everything you need to backup,
with the possible exception of any custom scripts you might have
created and put elsewhere... Regarding the Ubuntu CD you have, it
does not matter that you have a different version from what you
installed. To get into /home, you may have to mount that also from
the gui, once you have mounted root.disk, but I'm not sure as I have
never experimented with wubi. Someone with more experience there can
probably help if you are having trouble...

Once you are backed up and running again, you might want to consider a
full Dual-boot installation. This is a much safer, more stable way to
run Ubuntu if you plan to continue using it long term or as your
primary OS. Much easier to recover from a live CD also...