I just tried the new version of Windows Live Photo Gallery. I double-clicked on a photo on my desktop and noticed that Photo Gallery added the desktop folder to the gallery. I didn't like it and I wanted to remove Desktop from the list of folders that are part of the collection.
I right-clicked on it and chose "Remove from collection" (I'm using the Italian version so the menu choice might not be exactly spelled like that) but then all the icons on my desktop disappeared!
And there is no trace of them in recycle bin! I managed to do "Undelete" on desktop's right-click menu but it restored only one file. Both user's and shared desktop have been deleted!
How can I restore the desktop folder? As far as I know, System restore doesn't help with deleted files, but I can try for sure!
Fortunately, I never hit "remove from collection" on my real pictures directory :|