Yes, but... The Win XP Pro installation on my computer is 7.8 GB, so an external
hard drive is a more workable choice. The basic Win install is found in
/home/<yourusername/.VirtualBox/HardDisks/

Then there are the snapshots in /home/<yourusername/.VirtualBox/Machines/

I recommend removing all but the latest snapshot before backing up. Do not
simply delete them from /home/<yourusername/.VirtualBox/Machines/, but remove
them through the VirtualBox control panel. A proper backup of your Win install
should use about 20 GB.

I am also new to virtual box, what is a snapshot? i only used it for windows
office so it wont be acuiring 20gb anytime soon...

I have another query however, I wanted to run puppy lighthouse linux in virtual
box becase when I went to install it to my old laptop it wouldnt install, it
just skipped the process of writing data to the drive and went straight to the
grub options, i wanted to see if this was recreated in virtualbox on my pc,
however, the display options are an issue, it cant find one to use on my desktop
virtual box with which I am running ubuntu 10.4. When i went to display settings
it doesnt tell me what it is telling the virtual machines what it has access to.
How can i go about finding out what to tell it? The auto config for the
xorgwizard doesnt get it.

A snapshot is like a system restore point for the virtual machine. A clone
is a copy of the VM. I often use clones and copy vdi images from one
distribution or computer to another. I have vdis from several years back.

So where are these snapshots stored? it says under snapshots "powered off" - Is
there only a snapshot if it is powered on? Like windows equiv of hibernate file?

That seems a lot of trouble to go to just to use MS Office when OpenOffice.org
is free and will do almost everything MS Office will PLUS it can make pdf files
with a mouse click.

When you start VirtualBox, you should see a window on the right side with 3 tabs
marked "Details", "Snapshots", and "Descriptions". Right click "Current State"
and select "Take Snapshot", OR with Windows running click on "Machine->Take
Snapshot" at the top of the screen. This function is similar to Window's Restore
function, except it actually works. If you take a snapshot of your known
virus/malware-free installation and later get a virus, all you have to do is
revert to the clean snapshot.

I suggest you read the Help manual that is included with VirtualBox.

Moderately complex MS office documents do not work well with OO or any other
Linux alternative office suite for that matter.