It is dreadfully easy to give up your personal data when you dispose off your personal computer. All your files, personal and banking info and all your ‘dirty secrets’ can be revealed despite the fact that you formatted your PC before you sold it, gave it to charity or simply throw out as old junk.
There is delusion that reformatting will protect your private info, once you get rid of your old PC. Reformatting your PC's hard drive or even deleting its partition won't place data out of the reach of thieves. And ‘deleting' files by putting them into the Windows Recycle Bin is even worse - any data recovery software will be able to get them.
For example, put one bank document in Recycle Bin and, even if you've never been online, you run the risk of giving your name, bank details and address to third parties that may use them to create spoofed ID.
So be sure to really clean your HDD before you hand it over.
Using Utilities to Clean Your HDD
To clean your HDD efficiently you may use third party utilities such as Darik's Boot and Nuke (DBAN) block-erasing utility. DBAN overwrites each ‘block' of data on your hard drive many times, making them unreadable. User creates an ISO file and burns it to a CD. Then a user should boot up PC using this startup disk and, after a few simple keystrokes, all data will be destroyed.
Other useful cleaning software is Secure Erase utility, which is quicker than DBAN, taking about half the time a block-erasing utility would to delete the same data. This utility uses the built-in Disk Drive Secure Erase command that's part of almost every hard drive's firmware.
Encrypt the Data Before Cleaning
Another good method of protection is to encrypt a file before you delete it. Once you encrypt a file, it won't be easy to decrypt the data. Especially if you destroy the encryption key so no one else will be able to decrypt them either.
You could use a third-party encryption tool, but with certain Windows versions you don't have to buy other software. For example, you could use XP Pro's built-in encryption. Just right-click the files or folders you want to encrypt. Choose Properties, Advanced, tick the box for ‘Encrypt contents to secure data' and click ok. The same feature works in Vista.

Hammer Your Data
If nothing of above mentioned works, you can always use a hammer. It’s not a joke. Just like the government grinds retired disks into tiny bits to protect data, you could use popular tool of destruction. However, brute force won't put your disk beyond professional data-recovery utilities, but will prevent most data thefts. Hammer is also cheaper than commercial shredders, which will do the same, but at a certain price.

But before you destroy all data on your old computer, don’t forget to transfer your files on a new one.
Also, if you leave any licensed program on a PC you're donating to a friend, you're breaking the law, if you also install and use that program on your new PC.
To copy your program settings properly, the applications must be installed on both PCs at the same time. Most of the apps will allow you to do this, even if it breaches the license, but you must uninstall programs from the old PC when you're done or you'll break the law. If you have trouble installing an application for a second time, contact the software developer.