GOOD NEWS ! I found out the problem....
It seems windows 7 doesn't understand its own permission system for ext drives. If u had any kind of permission (Normally turned on from having a password on a user account) then windows 7 can't see in the drive and will only let u reformat it.
Lucky its very easy to fix as long as u have a 2nd computer with xp/vista installed.
First of all check that in control panel - folder options - view tab. at the bottom of the list make sure use simple file sharing is not ticked.
Plug the drive in on the 2nd computer, go to my computer, right click properties, go to the security tab, (vista uses will have to click edit) add a new permission... type "everyone" and set to full access... Apply the setting this will take some time depending on data.... now plug the drive in your windows 7 PC and be amazed that the data is all there....
I'm surprised Microsoft have made a mistake like this because there windows xp upgrade requires a ext drive to save your data.
Keep in mind that this will not fix damaged hardware.