[dnanian]

Most standard installations create a 'disk image' hosted on your HFS+ volume. Inside that image is a virtual Windows disk, and that's what's backed up.

Parallels/VMWare/etc should not be running when you back up.

TM is a problem because these images tend to be very large, and backing them up each time would result in a lot of disk space being used. Since SD! doesn't keep multiple versions, it's not a problem.