Kind of shocking that this stuff happens, particularly in the military. The company I now work for (Utility in Canada) is at the opposite end. Our company policy is that all drives (nearly all encrypted) are first subject to dban (multipass) and then shredded. This covers multiple problems including the company recycling the computer not shredding the drive like they were meant to. Personally encrypting all drives and using dban when decommissioning provides excellent security; shredding may be overkill. I believe all federal and provincial agencies have to do this. From the article it sounds like they just formated the drive.
Yes it sounds like that. If they used at least single pass overwrite, those files wouldn't be restored.