it is supposed to delete the windows operting system, but windows will not alow this so it will not do anything, you would need to boot off another drive to delete windows
It won't delete all the files that are in use at the time of running it, but it'll delete most things in Program Files and some out of the Windows folder, and all of the files out of Documents and Settings (XP only) that aren't in the current users folder. (/F = delete read only files and /Q is don't ask to delete a file)