to answer
I'd typically just copy everything on the hard drive to CDs or to another hard drive, nuke and pave, then either create a directory to move everything to from the backup on the other hard drive or just hand over the CDs. In either case, I'd say "Use this at your own risk. I recommend against it." I'd do that much only if I was feeling generous, basically. A nuke and pave is generally exactly what it sounds like: burn the village to save it. If your primary concern is data recovery, you'll have to pay for the time spent on cleaning up the data so that it's not a threat.
There have been times when I've told someone it's going to cost $200 to reload the OS with no data recovery, and was told pretty much exactly what you said: "It only cost me such-and-such to buy the computer in the first place!" At that point, the correct answer has always been "You could always just format and reinstall it yourself, or buy a new computer, then." I wasn't cruel about it: I'd offer advice, help 'em get a good deal (at a nominal profit to the consultancy), and so on. Frankly, though, if they wanted professional support, they'd have to realize that they'd be paying professional rates.
Plus, y'know, one or two times of this, and they suddenly start listening when I make recommendations about what sort of software to use, the importance of a router/firewall, and so on. I really did aim to help my clients save money, which is why they kept calling us -- but I couldn't justify just doing work for free, or at a massive discount, when that takes away from the time I could be using to do work that pays the bills.
Consulting's a pain in the butt, by the way, and one of the major reasons for that is that though it pays very well when it pays, it pays irregularly. I prefer a steady paycheck. It makes budgeting much, much easier. Plus, y'know, I've got a great job in a primarily Linux-based shop. I don't really have to deal with crap like spyware, adware, viruses, and so on. Even with the few Windows systems, I pretty much control the environment. My biggest support concern with the Windows systems is Microsoft screwing everything up with a broken patch.
