Hey Sa,
Protecting an AD LDS is a bit different as protecting AD DS.
You're right that you need to protect the instance install directory which is by default %program files%\Microsoft ADAM\instance_name\data
Afterwards, if you want to recover, stop the AD LDS instance service, restore the files to the original location and start the service again.
Ofcourse, when the hardware went dead, you will first need to rebuild the server, install the role etc... So it might be a good idea to include BMR of that server or protect the entire VM if it is virtual
Just my 2 cents
Cheers
Mike Resseler