I sort of followed the steps below but I didn't boot up do it from there. I just went into disk utility when I was in OSX. I don't understand the steps below why I'd reboot and hold down C key and all that? Did I mess up?
Connect an external hard drive (FireWire or USB) that has sufficient free space to hold at least one copy of the contents of your Macintosh HD.
Start from your Mac OS X 10.5 or 10.6 Install DVD. (Insert the disc, then restart and hold the C key.)
Select your language. Do not start an installation.
Choose Disk Utility from the Utilities menu.
Select the disk you wish to back up (your source disk, such as Macintosh HD) in the source pane on the left.
Click "Verify Disk" to check the hard disk for issues. If an issue is found, click "Repair Disk" to repair.
Click the "New Image" button in the toolbar.
Give your image a useful name such as "04-15-2009 Macintosh HD backup". A date in the name makes it easy to tell when the backup was made.
Note: For additional security, you can encrypt the backup disk image. From the "Encryption:" pop-up menu, select either 128-bit or 256-bit AES encryption. When prompted enter a password for the encryption: Use the password assistant to help you make a good password, or see this link for information about how to choose a good password.
Be sure the Save destination is a location on your external hard disk, then click "Save" to continue.
Enter your admin name and password if prompted. The imaging process will begin. The time it takes to complete the imaging process depends on factors such as the amount of data on your Macintosh HD. Approximately 1 GB per minute will be imaged, depending on various factors.
When the imaging process is complete, select the newly created disk image in the device pane. Then, choose Images > Scan Image for Restore... from the menu bar, and let the scan complete.
Quit Disk Utility (press Command-Q). Then press Command-Q to quit the Mac OS X installer; you will be prompted to restart.