Mubeezi, I have written a couple of manuals for my databases.  I think it's very helpful to put in screenshots right above the text where you describe something, so the user can see what you're talking about.  I have found the "snipping tool" in Windows 7 to be wonderful for that use.  (Not sure if it's in Vista also.)  If you don't know it, go to Start>All Programs>Accessories and find it there.  It allows you to "snip" just the portion of the screen you're interested in, and even draw on the image to highlight the part that you want people to see.  So, for example, I often draw a red circle around the button or control that I want to focus the user's attention on.  You can save the "snips" as jpgs and then use them in your manual.  Maybe you already know about this, but if not, check it out.

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Reply from Richard Rost:

I've been using Hypersnap for YEARS. Love it. I know they added this feature to Microsoft Office, and then Windows, but Hypersnap is still my go-to app for screen grabs.