Not exactly, you plug both hard drives in and boot from USB or CD outside Windows, then it simply mirrors the drive completely as it is without having to create an image.

TerraSin
Interesting. I didn't think System Image did a complete backup of the whole hard drive.

That's the point. The system image in Windows will do a full image of selected partition(s). So if you have partitioned your physical hard drive, you just need to include the other partitions to get a full image. If your hard drive is a single partition, you just back up that partition.
 
The downside, is that selectively including/excluding particular files is not possible, which is an option with some other methods, and it is somewhat more complex to mount a Windows created system image as a partition in order to restore single selected files. http://www.howtogeek.com/howto/34630/how-to-recover-specific-files-from-a-windows-system-image/