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Every object in WindowsXP is associated with permissions. If the permissions on that particular folder had been set to something other than "Everyone", then a particular SID (Security IDentifer) for each user had been associated with that folder. When you format and reinstall, the existing SIDs are lost and new ones are created. SIDs are kind of random numbers so the same SID would not be created for the same user. Since the SIDs don't match, you do not have access to the folder.
Wait until you do this with a computer on a domain and don't properly remove the computer from the domain before adding it and the computer level SIDs get all fucked up.....that's when the fun begins.
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