System Restore works a lot like the Undo command in Microsoft Word. You can use System Restore to remove any system changes that were made since the last time you remember your computer working correctly. System Restore does not affect your personal data files (such as Microsoft Word documents, browsing history, drawings, favorites, or e–mail) so you won't lose changes made to these files.

How does System restore work?

Windows XP periodically records a snapshot of your computer. These snapshots are called restore points. Windows XP also creates restore points at the time of significant system events (such as when an application or driver is installed) or you can create and name your own restore points at any time. If you’ve installed a program that has made your computer unstable, you can open system restore, choose a restore point, and return your computer to its previous stable state.

When you run System Restore, a calendar is displayed to help you find restore points. If you don't use your computer every day, some days might not have any restore points. If you use your computer frequently, you might have restore points almost every day, and some days might have several restore points.

System restore not creating auto restore entries  - Try this fix

Repair System restore

Disable or Enable system restore

Restoring your computer to an earlier time (XP)

Restoring your computer to an earlier time (Me)