OP was advised to first boot Partition Wizard CD to explore if files were intact.
If this had been followed, intact files could have been rescued by shrinking the partition using PW to install Windows 7, then browsing over to the confirmed intact files on partition which failed to shrink.
Once files were confirmed to be intact, shrinking using Partition Wizard CD would be no more risky than it has been in over 100 other Resizing operations we have helped with here without a single failure using PW.
However, if the files were not visible from Partition Wizard CD explorer, then they could not be expected to be there when OS was installed.
Hard Drive Partition Without Effecting Recovery Partition 
