Yes, but that would be scary bad- all the "$Files" are right in the front of the drive. Not a good place or the drive to be going bad. That is why I would suggest a run through with a drive utility if you want to try to keep it.
It is quite likely that NT just screwed up the partition... It is known to do that.
Interesting. I've been using NT and its successors since 1995, both at home and in corporations having thousands of PCs. I've never seen a case of NTFS losing data on a drive that had not failed physically.