(I no longer use the Sharp Zaurus and do not maintain these pages. I have left them here in case they are useful to someone.)
A NAND backup is a backup of the entire filesystem. If you take a NAND backup at periodic intervals, including when you first get your Zaurus, you can revert to that state easily.
1. Choose Reboot using the command on the menu. (This will unmount any file systems).
2. After the screen dims, push the battery access switch away from the battery. Remove the power and battery.
3. Hold down the D and M keys simultaneously, plug it in, and move the battery access switch back.You don't have to insert the battery.
4. This will bring up the diagnostic menu.
5. Pressing the down arrow key once will bring you to page 3 - it will say SERVICE(3/3) in red at the top and the first (yellow highlighted) menu item will be NAND Flash Bakup.
6. Make sure you have a CF Card inserted with at least 150Mb free.
7. With #1 highlighted (it should be from step 5), press Enter
8. It then says
NAND backup to CF / / file SYSTC760.DBK / CF Free:XXX.XMB /
Execute Backup?
9. Hit the Enter key. It should say "Backup..." and a green progress bar should appear at the bottom.
10. The backup takes a long time (about 10 minutes - some have reported more than 30 minutes).
11. When it is finished with the backup, reboot/unplug/move the switch out.
12. Reinstall the battery and the cover, move the switch, and do a normal power-on.
13. You can copy the file you have created on the CF to some other storage. (Make sure that you put it back on the root of the CF card if you need to restore it.)