I spent five minutes confirming what happens in Vista if a normal user attempts to delete a file in C:\ that they've been given permission to write to. (I didn't want to adjust C:\'s rights to actually allow them to add and delete files themselves.)
It does require elevation (of course) and I then couldn't see the file in the Recycle Bin. (I attempted to open Explorer as Administrator to confirm if I could see it then, but I don't think I really succeeded.) However it was returned when I used Explorer's Undo feature, so it was stored somewhere :-) -- Regards, Mark Hurd, B.Sc.(Ma.)(Hons.)
