Well, I don't understand why they would just wipe her machine without at least making a token effort to find any local data that needed to be saved. That said...
Storage is so cheap, and data security is so important and fundamental to any corporate IT infrastructure that you really should look into getting an adequate amount of "network" storage space. Start using folder redirection to make My Documents, etc. redirect to a (private) network location for all your users. Make it clear to your users that anything they give a damn about should be stored either there or on a public network share. This will drastically cut down on these kinds of incidents (intentional, accidental, or unforseen) even without going to extra lengths to hide the local machine drives.
Secondly, with respect to your old DOS programs, are these due to regulatory requirements (I'm thinking HEC, TR-20, TR-55, etc.)? Some of these do actually have windows versions these days. But if for some reason you're actually locked into one of the old DOS behemoths, it would probably behoove you to get
DOSBox for these anyway. Staying on XP indefinitely is not a viable long-term strategy. Sooner or later, you will have to update to Vista+. The issue here is the ntvdm (NT virtual dos machine) has gone away, and with it, 16-bit Windows emulation. Windows-on-windows (wow.exe) is now strictly for 32-on-64. So you're going to need it anyway to continue using this stuff in the future. But regardless of that, there are various ways you can use DOSBox to smuggle network locations into your DOS environment in a way that's transparent both the emulated OS and its applications.