After doing an update, massive amounts of Data and files are missing

This is what happened... Had been working fine (seemingly) the last few days I had been play "The Sims" which I recently re-installed and it was going fine. When I exited the game and went to check my email I noticed the ICON for Firefox had changed itself to just a generic item on My Quick Launch toolbar and the Desktop, I changed it back no problem.
Rebooted and then Quick Launch didnt appear at all, tried enabling it, got the Cannot create Toolbar, searched for fixes, found the IE4UINIT.Exe, didnt work.. tried the REGSVR32 /i SHELL32.DLL, it seemingly worked.
Did that, also went to Windows Update, ran a few I had forgotten to get before.
Rebooted Machine.
Upon the reboot got a message screen Telling me Windows Had Recovered from a Serious Error do I want to send a report (did not send report).

However since all that has been done, it is now like I have a fresh installation of windows somehow... a vast majority of My Douments is missing (before this I had 4 gigs of FreeSpace left on a 100 Gig HDD, now I have 53 gigs of it, My Music, My Pictures, Downloads, all Folders missing)
When I click on a program it is as if it is running it for the first time asks me about settings and such or for example Word tells me I need to activate it again. files that were inside the Hidden Application Data folder are missing...

I ran virus checks, nothing came up, and this seemingly only became an issue after I ran Windows Update or tried fixing the Quick Launch issue.
I did a search for a specific file I knew I had (a Letter I typed to my Aunt for Mothers Day) search found the reference to its title, told me it was in Docs& Settings Recent Folder, but there was No folder with such a name. When I tried clicking on the item itself it told me the path could not be found.
I find it pretty incredulous that over 70 gigs of data can just vanish...
System Restore had a point from 4:32am Friday morning, but nothing before that, I tried using this, it did its thing and told me it couldnt be done, no files had been changed or restored.)
I have access to a few Data Recovery programs,, but I do recall when I tried using one in the past it didnt seem to go all that well.

so I guess what Im asking, anybody else have this issue? What caused it? and know how to fix it, or if it can be fixed?

 

Did you get this sorted out?

 

Not so much,
I ran data recovery it found a few things...after that just did a full format and re-install. It wasnt my first choice but after posting here and a few other sites with no responses, I was at a wit's end.

Id still be interested in knowing what caused it to happen as to not let it happen again.

:confused