So in order to display data onto the screen, data must go into the RAM first?
Generally yes. But as I said that doesn't mean that the whole file must be in memory at once. That wouldn't even be possible in this case.
And if the RAM is out of space, then it stores temporary data onto the hard drive as swap files?
Yes, but again that's not what's happening in this case. Trying to read the whole hard drive into memory at once would crash the program - swap file or not.
Since it is storing data onto the hard drive, is there a chance that it will overwrite old data(such as deleted files)?
Yes, writing new things to a hard drive always has the chance of overwriting deleted files (but again note that you can't read the whole hard drive into memory at once and reading only parts of it at a time will likely not involve any swapping).
And when data is being stored from RAM as a swap file, is the data always stored in the same sector(s) on the hard drive, or is the address location dynamic as in it might not always be in the same location?
I'd assume it would be placed just like any other file. But I really don't know anything about how Windows handles swap files.
I'm trying to create a data recovery program and i'm worried that there will be significant data loss every time I read the entire hard drive.
If you try to read the whole hard drive into memory at once, the most likely outcome will be that your program will simply crash (though possibly only after a swap file has been created).
If you read the hard drive chunk-by-chunk with small enough chunks, there's no reason to assume that any swapping or data loss would happen.