Permission/ownership problem

I have a desktop system that had WinXP on it. I bought a copy of Win7, put the install CD in the drive, and booted. After waiting a long time(*), it finally booted and offered me a choice:
Upgrade
Complete install

I'd swear I chose fresh install, but when it finished installing all my user files, etc. were still there.

I went ahead and set up fourusers:
admin
admin2(+)
barry (normal user)
guest

But when I started using the system, I discovered that all the old files were owned by "unknown" users. The result is that I can't write my own files. In some cases, not even the admin can write the files.

This is a mess, and not very useful. For the time being, I'm storing new files on the external hard drive (where I had backed up all my user files before the install), but I don't want to do that permanently.

I've tried using the admin user to change the permissions and/or the ownership, but that didn't fix the problem. Maybe I didn't do that right? The choices offered didn't seem all that obvious.

So, how do I get out of this mess. My brain throws out two ideas:

1. Start over: re-install, then install my apps again, etc. But *make sure* that I get a fresh install. Maybe do something (fdisk?) to make sure that my hard drive doesn't look like a Windows drive?

2. One at a time, rename the existing user file directories, then create new ones and copy the contents of the old directories to them, then delete the old directories.

Which do the experts here recommend? Or is there a better solution I haven't spotted?

(*) I could write an entire DVD in the time it took the install disk to boot!
(+) I'd had a previous problem on a laptop where the registry got corrupted and the admin password was lost. I had to let the shop re-install from scratch. Every since, I've had two admin users, just in case.