Step 1: Before we start...
1) Nuking the hard drive:
Is where you use a cd-rom to remove all traces of ANYTHING on your computer, including Windows. This means that you will not be able to boot into Windows after nuking, so you will have to reinstall windows (unless you specified when selling). This way is probably quickest.
2) Shredding your files:
Is where you haven't yet deleted the file, and you shred this one file instead of deleting it.
3) Erasing Free Space:
Is where you remove traces of things you may have previously deleted. This keeps your operating system.