Back up your data. When you erase your hard drive completely you can't recover your files. Backing up ensures that your data is still available, should you realize you're missing a critical file or folder.
Reformat the drive if you're simply passing it on to a trusted family member, such as a child who needs a computer for school work. Reformatting deletes the files and applications on the disk, making it ready to receive new data. Insert the Windows installation disk and start up your computer. Follow the on-screen instructions to reformat your hard drive, including repartitioning and installing Windows.
Use a commercial utility software to provide greater security. These software programs write random numbers and symbols onto your drive, making the old data indecipherable. They're best used if you're donating an old computer. Darik's Boot and Nuke as well as Eraser are free to download and use (full link in Resources). Acronis is a low-cost alternative (full link in Resources).
Run the selected program multiple times if you need. While a single process, which can take several hours, is typically sufficient, multiple passes further wipe out the data, minimizing the potential to retrieve anything from the hard disk.