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possible malware question


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Hi,I have a somewhat basic question for the experts here:

I have a client that I do some basic hardware stuff for, networking, build new systems, install software, ect...
When I was there last week putting in a new router, he asked me about his home computer, said it was running very slow, weird stuff popping up (sounded like an infection) and finally windows died. I offered to help him get windows back up and running. After some issues with hal.dll, I was able to get a repair install done, and we found that all of his pictures, documents and many of his program folders were deleted. These pictures and docs were in a few different folders, some in his my documents, some in folders off of the root folder. This could not have been the result of the repair installation, as I have done many of them and never seen this kind of result.
Does anyone think it could have been the malware on his system? These files were not only deleted, but they show up as recoverable with my undelete program (http://www.officerec...tm#freeundelete, which has worked very well for me in the past) when I recover them, they seem to have a correct file size but the photos are trashed, every single one of them.
Has anyone seen malware that behaves in this manner, ruining every file that it deletes? I know this could be something else, but every single picture on this drive has been deleted, and every single document also, .txt, .doc, .pdf etc... no matter where it was stored. Its like something deleted them by file type, not by location.

I do see a bunch of toolbar programs in his programs folder that he said he did not install, and that is what makes me think it is malware related.

I was going to send him here for some malware help, but now I think his problems are way deeper than malware removal at this point.
Not sure if this is the correct forum to post in, so feel free to move it to another if appropriate.
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