Totaly false
Reinstalling windows xp or 2000 on an already installed one will not delete documents and settings. It will even create the user administrator as administrator.computername.
I've done it many time, reinstalling over an already installed w2k or wxp will simply delete some files of the winnt or windows folder (not all, since most dll in the system32 are still there so many application already installed will still work, but will not have their reg keys.)
If you didn't do a format, maybe you should try a search for the files.
Also, on the undelete web site, there is a free ware to view deleted files
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