To exclude folders, follow the directions below.
1) Open Regedit and navigate to HKEY_Local_Machine\System\CurrentControlSet\Control\BackupRestore\FilesNotTobackup
2) Choose Edit, new, multi-string value
3) Give a descriptive name
4) Double-click the value and input the full folder path you wish to exclude and click OK
System restore will no longer monitor this folder and backups will not be made of the files contained in it.