How to use the Windows Easy Transfer feature to transfer files and settings?

Windows Easy Transfer is a feature of the operating system designed to help move data stored on an older computer over to a new Windows 7 computer. When the transfer has been completed, a report will be generated showing the data that was transferred and a list of programs to be installed on the new computer will be provided. The new computer will contain user's familiar files, folders, and program settings. Windows Easy Transfer can automatically transfer the following data:

User Accounts
Documents
Music
Pictures
E-mail
Internet favorites
Program settings 
IMPORTANT:

The Windows Easy Transfer utility cannot be used to transfer files and settings from a 64-bit operating system to a 32-bit operating system.
For the purpose of this procedure, we will be assuming that the computer which data is transferred to is installed with Windows 7 operating system (the new computer), and the computer which data is transferred from is a computer with an older Windows operating system (the old computer).
The Windows Easy Transfer utility can be used to back up data from a computer before performing an upgrade or clean install of Windows 7 operating system and then restore the data to the computer after Windows 7 operating system operating system is installed. In this situation, the old computer refers to the computer before it is upgraded to Windows 7 operating system and the new computer refers to the computer after it has been upgraded to the Windows 7 operating system. Also, user must use the option to back up to an external hard disk or USB flash drive in this situation.
The Windows Easy Transfer utility must be installed on the old computer. The following procedure includes steps on this installation, but for the Windows XP operating system, user can also download and install the Windows Easy Transfer utility from the Microsoft Web site.
1. On the new computer, click the Start button, click All Programs, click Accessories, click System Tools, and then click Windows Easy Transfer.
NOTE: If prompted for an administrator password or a User Account Control prompt is displayed, type the appropriate password, or click Yes.

2. In the Windows Easy Transfer window, click the Next button.
3. In the What do you want to use to transfer items to you new computer window, click to select the desired transfer method:
An Easy Transfer cable 
NOTE: The Easy Transfer cable is a specifically designed USB transfer cable for use with the Windows Easy Transfer software. The cable can be purchased from the Web or a local computer retailer.

A network 
NOTE: In order to transfer files and settings using a network, the network must already be established and user must have administrative rights to the files and settings to be transferred.

An external hard disk or USB flash drive 
NOTE: This is the simplest and most common transfer method.