I agree that you should have a second computer for work, that way things won't get tangled between personal and work.
However, even if you stick with a single computer, instead of a second copy of Windows, just keep frequent backups. Tailor the frequency of the backups by how important the work data is and how often it changes. If you keep system images then if your hard drive dies, you'd only need to replace the drive and do a restore to be back in business.
I have had quite a few jobs where I did work from home. The companies I have worked for would never allow use of a personal computer, they always provided (and supported) a computer and would only allow the use of that particular computer to access the company domain.