No default programs working. System32/disk error?

Do a Repair Install

DeanP said:

Do a Repair Install

I would try that, but when I put in the installation disk, I get a message saying: WINDOWS COULD NOT RETRIEVE INFORMATION ABOUT THE DISKS ON THIS COMPUTER"

I think it's getting worse because I can no longer open the recycling bin, my computer and some of my icons aren't loading.

Looks like I'm going to loose everything on my hard drive.

This can be due to a service not being started in Windows when you try the repair install.

Please try this solution and let me know if it works:
1. Open Services.msc
2. Search for the service “Virtual Disk”
3. Right Click on the service and make it Automatic.
4. Start the Service
5. Reboot into the CD and try to do a repair install again.

The computer gradually stopped working all together. I was unable to do anything without having the computer freeze up or tell me I'm low on memory (which I'm not).

I shut down and booted from the Windows 7 disk. It was unable to find a previous installation of Windows. I'm currently installing Windows 7 x86. Hopefully this isn't a hardware issue.

As for the step above, it seemed like every default Windows program was inaccessible. This includes programs like paint, notepad etc...I was also unable to access the Control panel, menus, My computer, documents etc.
I couldn't open any pictures either.
I do however have a recent backup so hopefully I don't loose too much.

Thanks for the help though, although as far as I could tell, the computer was pretty much bricked.

Please download SeaTools (HDD Test) and check if you are getting HDD errors.