The encrytion idea would only work if the original was NEVER written to the hard disk. Also, the key could NEVER be written to the hard disk. In other words, you would need a shitpot full of RAM to even consider it.

And yes, you can pull info off a formatted drive. A quick format justs overwrites the partion table, and doesn't even touch the data. A slow format basically just checks to make sure the disk is ok and then overwrites the partion table. I have used a shareware program to basically restore a HD that was "accidently" formated. Got back about 90% of the disk...and thats shareware. Imagine what the government has.