Yes, you can absolutely do this, and it's a good idea for backup purposes.
Simply copying the files off into a folder and then onto a CD, however, will
NOT result in a bootable CD.; it won't put the boot files where they need to
go.
Most, but not all, CD burning software can do disk copying, and that's the
way to do this.
While you're at it, download Autostreamer and the latest service pack, and
make an updated, slipstreamed copy of your install CD. This will be very
handy in case of reinstalls.
Note that some OEM CDs that have other updates applied will fail
slipstreaming.
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