What do Windows 8 Refresh and Reset my PC really do?

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In Windows 8 I can reset everything and reinstall Windows. I assume this will clear my drive and start from scratch? Is that right? Does this create a Windows.old folder?

I see this dialog, but aren’t my settings and preferences saved in the cloud? If I screw up my settings and reset like this, are my settings also refreshed back to defaults?

Since I use SkyDrive to sync my files, my personal files are safe, right?

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Also, in Windows 8 I can refresh my PC without affecting files. Are my desktop and/or Windows store apps uninstalled when I refresh my PC?

I see this dialog, but I still am not sure. For example, when it says apps are “kept” does that mean I don’t have to buy them again or are they installed after the refresh is over for me? I assume “from disk” means desktop apps? Or maybe corp apps?

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What would motivate a user to choose between these two?

Solution:

When you remove everything and reinstall

  • The PC boots into the Windows Recovery Environment (Windows RE).
  • Windows RE erases and formats the hard drive partitions on which Windows and personal data reside.
  • Windows RE installs a fresh copy of Windows.
  • The PC restarts into the newly installed copy of Windows.

When you reinstall for fixing problems

  • The PC boots into Windows RE.
  • Windows RE scans the hard drive for your data, settings, and apps, and puts them aside (on the same drive).
  • Windows RE installs a fresh copy of Windows.
  • Windows RE restores the data, settings, and apps it has set aside into the newly installed copy of Windows.
  • The PC restarts into the newly installed copy of Windows.

Please note that you will loose the following settings

  1. File type associations
  2. Display settings
  3. Windows Firewall settings
  4. Your apps

What you choose depends upon the problem you face, if windows fails to boot up, then you can use refresh with fix, if you simply want every damn thing to be removed, use the former.

Also, your personal files will be safe on the cloud.

From the msdn blog.