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Mirror Folder - Does it have flaws?

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I understand that one could also use a RAID-1 drive with a "Data Disk", so the mirroring only applies to data. If the source drive fails, the data is there, but not the operating system and software, so that is not what I want. It seems to me, there is still significant downtime with this alternative. I'll look into Mozy, I use retrospective for backups right now to an external drive.

I understand what you are wanting to accomplish. The way I do it, yes there is some downtime. But, with the small R/W errors that crop up over time, and are cumulative, an occasional wipe / reinstall is "preventitive". I'll be doing one over new years, and have a nice fresh start for the new year. Speeds things up a bit too as the built up crapp is eliminated.
 
Windows, by itself, can handle a couple types of RAID in software.
You can check out the article on using WinXP FOR RAID-5 this way at Tom's Hardware, LINK
or, just Google Windows RAID1
.
 
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