External hard drives are a great way to back things up. 1 TB externals can be had for less than $100 all over the place. CircuitCity.com was bought by the people who own TigerDirect, so proceed with caution. If you haven't had any issues with them, good for you, but I've had people tell me mixed things about TigerDirect.
Check this article out:
Geek to Live: Automatically back up your hard drive (don't sweat the FTP/Remote options, unless you want to do that)
Backup software will allow you to pick and choose which directories you backup, so as opposed to mirroring, you'll back up only what you truly want backed up.
If you're really feeling saucy, I would first move all the files you want to keep onto the external drive, completely wipe and reload your current hard drive and partition it (one for the OS and apps, 50GB or so; and one for data). Then you can set your backup software to backup the data partition.
I have 2 250GB internal hard drives on my old desktop (I build it in '04), and have a 50 GB C drive (OS/Apps), 200 GB D (data drive) and do a monthly backup of the data drive to my 250 GB E drive (unpartitioned 2nd internal drive). Every 12-18 months, I wipe and reload the OS/Apps drive and the data stays separate.