A full PC restore is exactly what it says it gives you a complete duplicate from whatever you backed it up from, it is your operating system settings. All you do is take vLite and slipstream sp1 into a Vista install disk and do an installation from the slipstreamed copy. Once finished you have your Vista sp1 installed then you deploy your old files from the windows.old file in the root of C:
Problem with that is that the Vista is only stored as an image in the recovery partition, and slipstreaming is not a good idea especially if it already has drivers slipstreamed into it (which most OEM recovery partitions do these days).
OK, so here is the dilemma, I get that damn 0xc0000034 error when trying to update to SP1. So what I want to do is do a full PC backup, reinstall Vista, then do a full PC restore. Now, will the PC restore overwrite my OS settings? Meaning, will it drop Vista to below SP1 status?
Are you getting the sp1 in your windows update, or are you manually downloading it? If it isn't in your updates then you have incompatibilities and should not install it.
Full backup will be a mirror image of entire hard drive at the time backup is made
If you run into problems because of the situation as RIVE says, you may have a driver incompatibility with SP1 and may need to either upgrade to the latest drivers provided by your OEM or else uninstall (some of) your drivers to get SP1 installed so you can then re-install the drivers later.