From the way your question is worded, I think you may have some misunderstandings related to version control terminology.
You should have a single repository for each project. You can think of a repository simply as a folder on the filesystem. When you initialize a Mercurial repository in a particular folder, every file in that folder and any of its subfolders is eligible to be added to the repository to be version-controlled. You don't necessarily have to add everything, but any of it will be able to be added if you want to.
You can push this local repository to a remote repository if you wish, either as a form of backup or as a method of sharing your code with others. But if it's simply a personal project, this most likely won't be necessary, especially since you already have a backup solution in place.
Branches are typically used for keeping different "versions" of the project separated. As some people have mentioned, this can be useful as a solo developer for trying out a method of refactoring the code, or testing a different approach to a particular problem. If it doesn't work out, you don't have to worry about figuring out where to roll back to, you just torch the branch. If it did work, you merge the branch back into the main repository (the "trunk") and carry on.
If you do get to the point where you make "releases" of the code, and you need to keep maintaining old versions, you'll also want to use branches. For example, imagine that you release version 1.0, and some people start using it. While they're using it, you privately continue working towards the next release, perhaps 1.1, adding features in your trunk repository. Now, someone discovers a bug in the released 1.0 code that you need to fix, but you can't just fix it in the trunk and give them that code, because it's in no state to be released. This is where the 1.0 branch comes in handy. You can fix the bug in the 1.0 branch, and merge the bugfix change into the trunk, so that the bug is fixed there as well. Then you can repackage up 1.0 with the bugfix and get it out to your users, without having to figure out how to get the trunk into a state that it could be released to the public.
Other than that, there's generally not a lot of fancy work involved in using Mercurial solo. Do some work, and when you finish a feature, commit it to give yourself a "checkpoint" that you can come back to in the future if needed. You don't need to commit every time that you save or anything like that, just do it when you feel like you've added something somewhat significant. This will give you a nice history of the project if you ever need to look back through it.
For more information, I highly suggest taking some time to read through this book: Distributed revision control with Mercurial. You don't have to read into the advanced topics, but reading at least chapters 1-5 and 8 will give you a good introduction to Mercurial and version control in general.