Undersized disk image and a Boot Camp-related backup question

[dnanian]

OK -- creating the sparse image outside SD! is just fine (and is the recommended way if you want to use encryption). No trouble there.

And yes, you've answered your own question. We also skip temporary files, and some caches.

As far as backing up boot camp, I actually suggest using Parallels instead. It's a great option, works really well, and the file data is stored in a virtual disk file right on your HFS+ partition...