It really depends on the recovery system...some give you the option of performing a 'repair installation' in which Windows is repaired but your files, programs, and settings are left in tact. Others, though, don't give you that option and will simply reformat your hard drive and reinstall Windows, wiping everything out. Without knowing the make/model of your computer it's not possible to say.
In any case, please stick with your initial thread so that we can gather all of the information and limit confusion/cross-posting. I'm locking this one so that the discussion can continue in the other thread.
My OS is messed up. If I use the restore CD that comes with the PC, will I lose all the files?