Jeff wrote

I have never used Ghost before so here is my setup.

I dont think Ghost is the best product for
this sort of use, True Image is much better.

Win xp sp2 with two internal sata drives each in a removeable drawer.

System drive is C

Storage drive is D

What I'd love to be able to do is the following:

Back up Drive C to Drive D so that if something gets screwed up i can
simply remove Drive C and then the "D" drive would become an exact
replacement which would pick up where "C" left off.

Is this possible?

Yes.

Can I do Incremental backups nightly which would only backup files and
folders which have changed without copying the entire contents?

Nope. xxclone can do that tho.

If thiis is indeed possible....how can a backup drive which is a clone of
the original boot at the same time as the system drive, how does windows
know the difference?

Thats controlled by which drive you specify
to boot off in the motherboard bios.

Its also possible to setup a more complicated config
using the standard xp boot manager which allows you
to specify which drive you want to boot off at boot
time. Little bit fiddly to setup, but quite doable.

The fundamental question is tho whether you really
need to be able to boot off the spare so quickly.