Many people have heard about how to format a hard drive. Some mistakenly believe that just because you can't view your data, that means its not there anymore. Formatting C:/ does nothing but delete the references to your data, the data is still there for people to find if they are looking for it. There are many programs that can detect this data and recover it - for both good and bad purposes. I know of a few live Linux installs that can do this, see my earlier about live Linux CD's for those those.
I would like to mention that there is no sure-fire way of deleting data from magnetic media. If you overwrite it, delete it, or wipe it, there will always be a way to recover the original data. However, there is a bright side to that flaw, just because you can recover it, doesn't mean it will be cost productive for a thief or other interested party to do so. The following tip will help reduce the likelihood of data recovery, but once again there is no sure fire way of protecting your magnetic data - short of igniting a pound of thermite over your hard drive and melting it.
If you are selling your computer you either want to wipe the hard drive completely, or destroy it and make the buyer get their own. Personally, I like taking the hard drive out and making a clock out of it. But for those who need to sell the hard drive too, here is a free (I'm all about some free) program that has 4 built in flavors of wiping your hard drive - or just individual files. It's called Eraser, and its homepage is here:
http://www.heidi.ie/eraser/
Eraser uses 4 main algorithms that overwrite the data you tell it to. It will overwrite 1, 5, 7, or 35 times. The 1st option uses only random data to overwrite the data, the second and third options use a Department of Defense algorithm, and the last one uses the Gutmann method. It is one of the best methods out there to reduce the likelihood of data recovery.
With Eraser you can create automated erasure events, erase the free space on your hard drive, and choose a custom method for erasing. Meaning that you can customize the number of times Eraser overwrites data. It can be set anywhere from 1 to something around 999,999 times. Needless to say, It would take a long time for your hard drive to complete that many cycles, but if you had something you absolutely had to make sure that nobody ever saw, you might need to pick that option.
What I like most about Eraser is the addition of an "Erase" option when you left click on files and folders in Windows. I never "delete" anything anymore, I erase it.