I used that 2 times on Vista and I can say that THERE IS much better way of doing this but its more complicated.Anyway WINDOWS EASY TRANSFER is pretty easy to use.It will transfer the following things:
-files and settings
-user accounts
-documents
-music
-picures
-e-mail
-internet favorites
-videos
-music
-and so on...
However...Windows Easy Transfer does not support transferring entire installed programs and system files!!!That means that BEFORE transfering all this on the new or the same computer,you must FIRST install those programs you had installed before and THEN transfer all this back.Here is a simple way how you can do this:
-get an USB HDD,connect it to your computer and completely format it into the NTFS file system
-on that USB HDD create the new folder called lets say "DATA"
-now using the Windows Easy Transfer just transfer EVERYTHING that you possibly can from your computer on that USB HDD
-after that is finished,shut down your computer,unplug the USB HDD and then simply reinstall Windows
-after you have completely reinstalled windows and again installed all the drivers and programs you had before,connect your USB HDD into your computer and again using the Windows Easy Transfer just transfer EVERYTHING from that USB HDD back to your computer
-after transfering is complete,restart your computer...
Anyway like I said.There are better ways of doing this.If I am on your place,I would just install and adjust everything I need just on the way I want and then simply clone that drive.So the next time I reinstall Windows OS,I just clone that cloned drive back and I do not lose ANYTHING.It saves a lot of time and you dont need to install anything.Here are some programs for this purpose:
-Acronis True Image (program)
-Norton Ghost (program)
-DriveClone Pro 5.0 (program) - (this one is very easy to use and also very good one)
-Linux Ubuntu 9.04 (this is NOT a program.It is the free Linux operating system) - (the best way and 100% safe.I am using this for cloning my entire HDD by the way.I am cloning it right now so I am writing this from my dad's laptop

)
Cheers!