Hold your horses. I doubt you have lost anything at all if all you have done is put the old hdd in as a slave. However, reformatting may be the best option. Here's some more comments about the old drive.
If it was the c: drive of your old pc, for starters it has a copy of Windows installed on it, has the registry from that pc and program files linked to the registry on the drive.
If you bought your new pc and the OS was installed (XP?) or you installed it yourself, it will boot up and run Windows from that new master hdd. Now you add your old hdd that has all the OS and other junk from your old pc. Not surprising the pc is confused about where files are.
If you took your new pc, removed the hdd that came with it, inserted your old hdd as the master, it's fairly likely that the pc would run. It would use the operating system from the old pc. What I am not sure of is how the XP key comes into play. As you know you can only install XP on one computer. Now that the OS is in another pc with another motherboard I don't know if there would be problems.
To make things simple here's one way I was suggesting you make the change. Take the hdd out of your new pc. Make it the slave on your old pc. Copy every file off the old hdd on to the new hdd (ie mirror the drive). Now take the new hdd and put it back into the new pc. You now have the new hdd with the old program files and OS installed. If your new pc came with a more recent or better version of Windows, you could then upgrade. If your new pc came with a bunch of software already installed, this may not be a good way to go. Copying the old drive will remove them.
It does not sound as though you are very well up on doing these sort of changes. If you have all your program installation disks from the old pc, you will probably be better off reinstalling them on the new pc. Best way to handle the reformatting and partitioning of the old hdd in the new pc is to go to Start / Programs / Administrative Tools / Computer Management / Disk Management. Doing things is fairly intuitive. Use Help if you need it.
Starman*