A friend of mine who is switching jobs has asked how to delete all personal information from the company computer before returning it. Simply deleting files can prevent the casual observer from finding your data, but file deletion typically does not (to make an analogy to paper) shred the file but merely throws away the information that tells you how to find it. A sufficiently dedicated person could indeed search through every possible place on your computer’s drive and re-construct your deleted files.
In brief, the best tool I am aware of to prevent this is Darik’s Boot and Nuke (dban). This software goes on a floppy or bootable CD image that you create and then completely overwrites every place any file could have ever been stored with garbage data. This is the ideal solution if your employer has a standard software image that they will use after you return your computer.
If you need to be a bit more precise (e.g., your company really needs that one Windows license and can’t re-install), you may need the Heidi Eraser which runs in Windows. This uses the same secure wipe methods as dban, but can be applied to “empty” space on your drive. Thus you can manually delete your user account and wipe any windows cache directories (e.g., everything in C:\Documents and Settings\YourUsername) and then run Eraser as the administrator user to clean off any bits. Heidi Eraser includes dban so you need only download one
Secure deletion takes a long time (many hours!) so be sure to budget sufficient time to do this.