Softwares Back-up and Distributions?

There are numerous back up options, depending on the media you desire to use.

For a simple restore on 1 computer, a CD-R based backup is probably the easiest, and least expensive. Just make sure that the software you use supports restore from a boot floppy.
Or bootable CD if your system supports booting from a CD.

That said, in Windows 9X, one of the benefits of formating the hard drive and starting over is a completely new registry.
If you are formating the HDD to correct a Windows problem, restoring the entire system from a backup will not give you the full benefit of your efforts.

As to distributing software, what you need is a site license setup with the systems administrator tools.
With the admin tools, you can automate the setup to select the installation options you want.

It is both illegal, and impractical to distribute software from one system backup to another system. Between registry settings, DLLs, and other system specific issues, it will give you more problems than it is worth.