How do I know I am saved?

In a ridiculously lengthy but fruitful series of comments left on a recent post on Susan's (a.k.a. Halfmom) blog, the topic of "assurance of salvation" was brought up in this way:

People who have been saved seem to know they have been saved. Since I have no idea whether I am saved or not, I presume I am not.

My sympathies go out to Estelle and all those who wrestle with such painful doubts. The reason is: I too was torn up over this very issue. All my life I grew up believing that everyone who believes that Jesus Christ died for the forgiveness of his sins (the believing person's sins, not Jesus') would have the gift of eternal life (e.g., John 3:16). But during my freshman and sophomore years at Michigan State, a nagging doubt crept up from time to time: Do I really believe that? What does it really mean to believe? Do I believe it enough? Faced with the reality of a hell of eternal torment that would never, ever cease, I had cause for alarm.

In addition, a few things I've read recently have really provoked me to think more deeply about assurance of salvation and the nature of faith. If we are justified through faith, if faith is what unites us to Christ and keeps us in communion with all his benefits, then what is such a "saving faith"? Can I or should I know that I possess saving faith? This is a matter of no small importance, for it is our Father's desire that we "draw near [to God] with a true heart in full assurance of faith, with our hearts sprinkled clean from an evil conscience and our bodies washed with pure water" (Hebrews 10:22). We as rebellious covenant-breakers need assurance that we have found pardon and rest in Christ if we are to rightly glorify God's mercy at the Cross.