Malware distributed as UltraDefragger and SystemRecovery attempts to ensnare unwary users by displaying sensational and frightening alerts. A new twist: falsely notifying users that a hard drive is about to fail. Designed to trick users into purchasing an application to fix the non-existent "problems" that were detected. This malware goes beyond mere alerts, however. It moves files from All Users and the current Windows user’s profile into a temporary location, making it appear as though problems with the hard drive are CAUSING files to disappear. It also disables a user’s ability to change wallpaper images and sets registry keys to hide CERTAIN icons — giving the impression that programs are going MISSING as well.

http://www.symantec.com/connect/fr/blogs/trojan-feigns-failures-increase-rogue-defragger-sales

http://tech.slashdot.org/story/11/05/20/2334259/New-Malware-Simulates-Hard-Drive-Failure?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Slashdot%2Fslashdot+%28Slashdot%29

http://www.geek.com/articles/news/new-malware-tricks-users-into-thinking-hard-drive-failure-is-imminent-20110520/

I removed this malware scam from a friends computer last MONDAY. I used the info found in this link to do it.

http://www.bleepingcomputer.com/virus-removal/remove-windows-recovery

There was no access to files, no START button, task bar or desktop files, but following the instructions from the link seemed to do the job. If anybody knows differently, please let me know.Thanks for the information.  I have seen this one as well.....took it off a friends computer. I can understand why a lot of people would get scared over it. If you didn't know it was fake you would be sure you needed a new drive.