Do you need to backup those items....absolutely.
The upgrade process should be seamless and not cause the loss of data and
the Outlook profile should remain intact but if you do so, you do so not
only at your risk but at the potential peril of losing the client's data.
These routines are not perfect, things do go wrong and personally, I would
never perform such a function on a client's machine or my own for that
matter without being well backed up.
Also, be aware, some applications may need to be reinstalled after the
upgrade and some files, most notably data files may not be in their current
locations. For example, assuming "My Documents" on the client's system is
in the default ME location, they will likely be moved to a sub-folder
location under his user profile name in XP.
One other point, prior to running the upgrade, it would be advisable to run
the upgrade advisor on the XP Disk. While at the ME desktop, place the XP
CD in the drive, when the setup screen appears, select "System Compatibility
Check." This may find problem hardware or software on the computer that
should be addressed before upgrading to XP.
NOTE: Do not assume any item that comes up in the compatibility check is
trivial. There are many people who have run the check, found what they
thought were innocuous items only to not only have installation fail but
having to format their hard drive and start over with their previous setup
(another good reason to be well backed up).
Save yourself a lot of worry and potential trouble, be sure the client is
well backed up and be sure to run the compatibility check. One other point,
ME's backup utility is not compatible with the XP backup, no 9x backup file
can be opened and restored using the ntbackup in XP. There is a free trial
downloadable backup that can handle those files if necessary called Backup
MyPC:
http://www.stompinc.com/index.phtml?stp