Shadow copies are previous versions of files or folders and are created at the same time as a restore point. However, the system protection feature must be enabled! To Enable System Protection and see an explanation about Restore points and System protection visit System Protection
By defaut, Windows 7 creates Restore Points and Shadow copies for the system drive only (Ex. C:). So, make sure that you set the Restore Settings for each and every drive you intend to save valuable data. Shadow copies are managed by the Volume Shadow Copy Service. Therefore, it is very important that this service is never disabled as all backup operations rely on it. Although, its startup state is manual, the service starts as needed by the different applications.
To restore a file or folder you simply right-click the file or folder (in windows explorer) and select the Restore previous versions option.
If the Restore previous versions is not available then your file structure must have been changed. Also, note that the restore operation is not reversible!
From the Restore previous versions window select the date of the desired restore point. If no previous dates are available, the selected file or folder has not been modified.
You have three options. You can Open (Open button) the file and view its contents and save it to an alternate location, you can Copy (Copy button) the file to an alternate location or you can just restore the file by clicking the Restore button.
Remember, that if you cannot find shadow copies of files, then you have system protection disabled for that drive. Also, shadow copies are unavailble for Offline files and system files that are used by Windows 7.