If you install Windows 7 on a computer which has Windows Vista installed or if you perform a custom installation of Windows 7 instead of an upgrade installation, you will see a windows.old folder on your system drive.
In some case, you may be unable to perform an upgrade from an earlier version of Windows. If you cannot upgrade, you may be required to perform a custom installation.
In such a case, you may want to recover your personal files from the Windows.old folder, and move them to the custom installation of Windows.
While one could always follow the steps mentioned in KB932912 to restore it manually, Microsoft has now released a Fix It solution to carry out this task easily. You can use this Fix It to restore your personal files after you perform a custom installation of Windows Vista or of Windows 7.
Simply download Microsoft Fix it 50582 and run it. It will restore your personal files for you!