Hi zigzag,
The Software restore disk contains a disk image that allows you 3 options... 1)restore (backing up current drive to a folder), 2)restore in place (overwrites like files - ie system, applications, etc, w/o erasing anything you might have installed or the preferences), 3)restore (erasing hard drive). While the software install allows more customization and doesn't tie you to the factory default configuration, allowing you to reinstall just certain applications or certain parts of the system software... The software restore is great if you want to bring your computer back to the factory default configuration...
hope this helps...
dave