I have used a very simillar procedure to this with software other than ADSM
and have had reliable results.  My procedure however is to load Window into
a non-standard location so that the restore doesn't have to fight over
resotring active or open files.

If, for example you normally have Windows in the c:\windows directory, then
format the disk and load it into the c:\win95 directory.  Then load your
backup software and run the full restore.  There are a couple of files in
the root directory that tell Windows what directory to use.  These will be
overwritten by the restore with files pointing to the correct location.
When the restore is finished, turn off the machine via the power switch.
Don't shut down "nicely" because you really don't want your temporary copy
of windows writing any more data out once the restore is finished.  When the
system boots up next it may ask to restore the registry and reboot, which is
fine.  When it boots up again remove the temporary Window directory
(c:\win95 in this case).

The advantage to this method is that you get back all your files, and don't
miss any because they were active during the restore.  The disadvantage is
that the user needed to have about 35 MB free on disk or else there wont be
room to recover everything in one pass.