Do the hidden files and folders mentioned in the article exist?
Absolutely, although many of them aren't nearly as "invisible" in Win 2K or XP as they are in Win 9x (the article targets Win 9x specifically in terms of file/folder names and locations).
Did MS "hide" files and folders for nefarious reasons?
I'm not even going to touch that one. I may make jokes about The Great Satan and The Beast of Redmond, but I'll bet lazy/sloppy coding practices are as much the root of the issue as anything else.
In addition, Microsoft is by no means the only "guilty" party in this regard- I can give you the names of dozens of obscure Netscape, Mozilla, Apple, Linux/UNIX, etc. files which store exactly the same types of private (and possibly embarrassing) user data that the article's author is concerned about.
The upshot is this: The raw facts presented in the article concerning the invisibility of certain Windows files/folders are essentially true, but the paranoid, conspiratorial wordcrafting used by the author gives the whole thing a *cough* rather biased tone.
Not true! This artical his been up for a long time. The files he mentions may have a 'h' attribute for hidden or something but its totally wack the way he makes it sound. Anyone can view these files, its not like their rootkited like sony's sh**.
Some is true. The part of Internet explorer not deleting your net activity (Index.dat in Temporarly Internet Files Folder). Tweakwindows deletes them if you set it to. Part about not being able to see some files in MS-DOS mode - balls! There is no file invisible in the DOS mode (unless the path is 60-character or longer), but you can see all files in the windows too (95/98) if you approach it the right way (Temporary Internet Files is the dodgy folder to see)
And part of RELLY HIDDEN STUFF -B A L L S !
I did many inspections on my HD's.
I did manual FAT restoring, even written a program that restores files on formated disk by directly accessing drive and reading sector by sector trying to find certain file header and directly wiriting a position of the file in the FAT and writing the file in the root folder. So you can say that I KNOW what was on my disc. (Windows 98SE)
The stuff he refers to are DELETED temporary files that are used during installation. That's all.