Yes this is the way it has been done
This is why you cannot find your recovery CD since it is all in Drive D instead.
I'm not sure how it works, but you should be able to run that yes to restore everything. It'd restore it to how the computer was, and so should keep the programs, and also send the OS back, though you'd still have everything. You'd then just have to put all your documents and saves, etc back on.
If you go into this folder (if its not an exe or something) and has a readme, open it and it might tell you what you need to press at bootup to start Drive D copying data across to C again to restore back.
What Drive D will be acting like is an image which will just copy exactly what it was like, and copy the whole lot onto Drive C, so it'll be as new again (fast and all)
I hope this helps