Hi,
i wanted to increase the size of my partition where windows is installed , i have got this partition which is empty so wanted to sort of merge it with C drive. Is it possible to do so without actually formatting the whole hard disk,
Some one told me atleast i will have to format C; drive..now that means losing all the registry files to the programs ? how do i back up those files?

You can increase the partition size by using programs such as Partition Magic [Symantec], Partition Commander [VCOM], or Disk Director [Acronis].
You can also increase the partition size using Windows Disk Management [under Administrative Tools in the control panel], but if I am reading the help files correctly you will have to change the volume [C:] to dynamic instead of basic.

As far as I know, the only way to restore your programs after formatting and changing a disk is to reinstall them. You could image the disk, but that would only return the disk to its original state.

I have multiple partitions on 2 200G hard drives.  I found that the simplest and safest way to add partitions and/or change their size was to use a program called Partition Magic.  I've used the program for years without loss of data.

I second the recommendation of Partition Magic. I have used it with only one problem I caused myself by leaving a small area outside of all partitions. It was easy to fix.

   Before you change the partitions, always make a backup.  You never know what will happen.  I have heard of Partition Magic messing up and losing all of the data, so be sure to backup.
   We have WinRescue (http://superwin.com/rescuexp.htm) which backs up files and the registry, but backing up the entire image would be better using an image backup program like, DriveImage XML or Norton Ghost.

I too have used Partition magic for years with no problems or loss of information but, as Ray suggested, back-up first. With computers, anything can happen and usually does eventually.

Because my laptop came with the hd formatted as one partition, which inconveniently holds my OS, I'm reluctant to change the partition size without a backup.  Can anyone recommend a program that will allow a system restore from an external (usb, if it matters) hd in case of data loss that renders XP unbootable?

Acronis TureImage can easily do that.
http://www.acronis.com/homecomputing/products/trueimage/