The letters used to designate drives are assigned by the computer, and will vary depending what drives are installed. C: = the main hard disk
I will quote your questions, followed by my comments.
"I need some clarification on this point. When I choose to do a backup the file name JerryCollins (my file name) appears in the backup window. Are you saying that I should use something like JerryCollinsJan2010. Since the file name is different I could not restore it to Jerry Collins."
Yes, I am saying to give the backup a different name, so that it can be restored without it replacing your main PAF file.
"You suggested that I create a completely new file to place this backup. Should the new file be named JerryCollinsJan2010 also so that I could use the restore feature. This seems logical to me but if I am mistaken could you offer an example."
I think you may be confusing the terms "file" and folder". Think of a "file" as a document in a filing cabinet. A file "folder" can hold many documents. It is not necessary to create a new folder for your backup. I will usually create a new file if I plan to import a gedcom file to examine its contents. (The new file is empty when created by File > New, so to add data I can import it from a gedcom file.)
"I am confused about my E: and D: drives. I only have two CD-ROM drives installed in my case. The typical C: CD-rom drive for import and one other drive although when I go to My Computer it lists both of them."
C: will be your main hard disk, the one that includes the Desktop, MyDocuments, Program Files, Windows (operating system), etc. Think of C: as the heart of your computer.
A CD-ROM drive can read CDs but cannot write to them, and cannot read DVDs. They were used before "CD-burners" (CD-RW drives) became available, but are seldom seen any more. A DVD drive can read and write CDs and DVDs.
"Evidently, my E and D drives are a combination unit and dependent on whether I only want to write to disks (drive D) or read and write (drive E). The disks are differnt for DVD-RW and DVD. Not really a problem because I know that I should use DVD Drive D: for my PAF backups."
DVD drives can normally read and write to CDs and DVDs. CDs and DVDs look identical, but a DVD can hold a lot more material. (I have to read the label to know whether an optical disk is a CD or a DVD.)
"I will soon turn my attention to getting a flash drive but that is another learning curve for me to resolve."
I think you will find the flash drive easy to use. I find them much simpler than a DVD drive.