I have a stable OS X installation on my machine. I want to create an image of it and be able to restore it later when needed.
Is there a way I can do this in OS X? How can I restore the image later?
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Use Applications/Utilities/Disk Utility.app. There, just select your system volume ("Macintosh HD" in most cases) and press the "new image" button and save it to an external drive as an dmg file.
To restore it, you can boot from the install cd and again, use disk image.
But, starting with MacOS X 10.5, there is Time Machine, which is an fantastic backup program. Keeping an image of your baseline install is a good idea though, as Time Machine doesn't keep the history forever when the Backup Volume gets full.
At work we use carbon copy cloner (http://www.bombich.com/) for our Macs to do the same tasks that we use Norton ghost for on our windows machnes. It seems like a GUI to the native disk imaging utility. ASR is the command line tool provided by Apple to create disk images. http://www.bombich.com/mactips/image.html has some info on that.