system restore rollls back your system to a point where it was, tracking the enitire contents of your hard drive would take an awful lot of space, so i think it just stores drive table information etc, and not the whole file system.
for instance i did a restore point, and copied some exes into my c:\tools\ directory, did a restore and the files had disappeared! microsoft does say it wont touch your documents, images email etc, but it definetely removes executables.
Plus if it does delete anything you can unrestore the restore and go back to the way it was !
