If you have a backup that is located on a drive OTHER than the computer's hard drive (in your example a USB flash drive), then you are correct that you will not lose any AWdb data when they upgrade the laptop from Win XP to a newer version of Windows.
Note: The easiest approach would be to just copy the entire Approved Workman folder to a USB flash drive, then when they give you back the laptop, you can just copy the Approved Workman folder FROM the USB flash drive back to the C: drive. You'll want to make a new desktop shortcut for convenience in launching the approvedworkman.exe program executable file that you'll find inside the Approved Workman folder.