Just check to make sure it's not in the recycle bin first . A long shot, I know, but you never know!!
But then it might not be just the system32 folder missing. Make sure you do back everything up.
I'd say for the sake of making sure it's not a hard drive problem (physically) copy as much of the stuff as you can onto the computer and then when you reinstall windows format the drive (FULL) as well. The format will pick up if there's any problems and the installer will squeal about it. Or, you could just do a disk check from your computer on that drive... one of the two .