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There are two general categories for Data Recovery:
Logical Failure: The hard drive is mechanically sound - it spins correctly, the operating system recognizes the device, and all of the mechanical parts inside of the hard drive are functioning correctly. However, there is some reason that the data cannot be accessed through ordinary means. (This can include: accidental deletion or format, data corruption, operating system crash, or miscellaneous lost partitions or boot records.)
Mechanical or Physical Failure: The hard drive is somehow physically damaged. Some internal part within the hard drive is no longer functioning correctly. The hard drive may make clicking noises or is not recognized by the operating system any longer. (This can be a hard drive crash or control board failure.)
How hard drive data recovery works:
Logical Failure: The lost data is most likely still intact on the hard drive unless new data has been written over it. When a file is deleted or the drive is formatted, the data is not actually removed; the area where the data was stored is simply reallocated for new data storage and the file pointers are reset.
Mechanical or Physical Failure: The data may still be intact on the hard drive platters but is not accessible due to some mechanical malfunction. Recovering data from a physically damaged hard drive is a very delicate operation and needs to be performed using specialized equipment and processes.
In the case of either a logical failure or a physical failure there is a good chance that data can be recovered successfully if the attempt to recover the data is made immediately after the data loss occurs.