You might install your operating system on a smaller partition, and then change in registry so that all users' documents and settings are on a second partition. Also, instruct Windows to install by default programs in d:\program files. Move the virtual memory on the second partition, and maybe (if you use it) your hybernation memory also on the second partition.
After all that, you might end with a small enough first partition, that you could save on a DVD. You might also make the image on the second partition and then dump it on a CD.
You might try to use Ghostzilla for this. I really haven't tried it, but it might work for you (and it's free). I've gone all the way to put it into a bootable USB drive, but no more than that (I didnt' create/restore images yet)