Windows settings reverted on restart

[Avinash4]

Everytime my friend restarts her computer, her windows user account gets reverted back to the default HP account, with the default wallpaper etc, and all her desktop icons/files get moved into /Documents and Settings/... All settings specific for her user are lost. She also has problems with voice converstations on skype and MSN. A harddrive failure message keeps popping up. I think it might be an actual hard drive issue, so the SIDs aren't being saved when she restarts or a faulty cable. Any other suggestions?