I have this exact same problem. I tried installing Prince of Persia the Two Thrones, a game manufactored by Ubisoft, and it wanted a restart as the installation process finished. At the same time, Windows 7 also gave me multiple warnings that the game used drivers without valid signatures. As the computer rebooted, it had gone into recovery mode and strangely not only did it remove The Two Thrones from my harddrive, but also Prince of Persia Sands of Time which I had installed successfully only moments before, and it also apparantly removed my winamp player. I could easily understand the need to remove the game that caused the conflict with the OS, but removing another perfectly functional game and my winamp player at the same time seemed plain unreasonable.
Regardless, the winamp player and the previous Prince of Persia game were easily reinstalled and I don't seem to have lost any other files in the process.
However, it would be nice if a fix to the problem with Prince of Persia the Two Thrones could be found.