As you probably already know, when a file is deleted from a hard disk, the actual file contents are not deleted. Instead, the space used by the file on the hard disk is "deallocated", meaning that the clusters on the disk being used by that file are marked as available for writing future files. However, the actual data remains on the disk until a new file occupies the space used by the old file.
This is a problem if you thought you deleted a file that you don't want anyone ever to have access to. The reason for that is that it's relatively easy to use commercial and freeware tools to find the data stored in this deallocated clusters. If someone gains access to your disk, they can use these tools to find all types of interesting information, such as the contents of your private emails, your contacts, and documents of any kind that might contain sensitive information, such as tax returns and credit card information. In addition, passwords that might have been stored in deleted documents could also be retrieved.
Another situation where you definitely don't want any data remaining on the disk is when you decommission a computer. Since the computer will no longer be used by you or your company, you want to make sure that whatever took place on the machine's disk is never available to any subsequent owners of that computer or the disk contained in that computer.
You can solve the problem of "deallocated" data still living on the disk by using the free tool, cipher.exe. Cipher was initially used as a way to manage EFS, but a far more useful aspect of Cipher is using it to delete the deallocated data on disk. You can use Cipher to delete individual files, folders or the entire hard disk.
For details on how to delete the entire contents of the hard disk, check out http://technet.microsoft.com/en-us/library/bb490177.aspx
For details on how to delete files and folders, check out: http://support.microsoft.com/kb/315672
Thomas W Shinder, M.D.
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MVP - Microsoft Firewalls (ISA)