Basically ghosting is taking an image (i.e. an exact copy) of a hard drive and then saving it to a file, much like creating a winzip archive - you take the information, store where it came from (in the case of winzip which folder, and in an image what position on the HDD it came from). This means that yes, you could do it over the network (although the OS you would boot into would have to support network).

As the image will basically overwrite everything on the HDD, you cannot be using anything on the HDD, otherwise when the program tries to write to that location it would get a conflict with the OS (or whatever was writing to there). This means that you have to boot from a floppy disk (or bootable CD), and run all programs from there. This means that no data will be stored on the HDD (only in RAM) so the ghost program can write where ever you want.

And finally, as long as it is done properly ghosting will completely replicate the software state of a PC. This includes everything _even_ hardware_ drivers so make sure to be careful if you've changed the hardware on a box, as the old image will be for another configuration. It should still work (to some degree) but it could be interesting.