Some computers when booting up will have a menu item pop up asking if the user wants to restore and start over. It has a hidden partition with Windows 7 that will put it back to factory settings. It usually wouldn't do this without repeated warnings. The other possibility is that his user account got messed up, or he accidentally logged into a generic account. But all user accounts are gone.
The chatroom says he should look around in Windows Explorer for a "Windows.old" folder, or something similar. They think his data was preserved, it was just put into a separate folder. Leo also suggests looking in the HP forums, as it might be something specific to his model computer.
In general though, Leo thinks something is going on with that hard drive and it may need to be formatted or replaced. He would not trust that hard drive anymore.