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Like the others, I too would like to express my sadness and deepest condolences on the loss of your father.
I am aware of an application that worked with older NT / Win2K servers. It looks like it has been updated through Vista. http://home.eunet.no/pnordahl/ntpasswd/ - You might want to be careful to verify operation with Win7, as the program boots as a Linux app which then adjusts the windows SAM entries with new hashes. I have never had any issues, but I'm not using Windows 7. As another post mentioned, if the data is encrypted, which you will discover pretty quickly using the secondary drive suggestion, then DO NOT use this solution.
You might also want to try Microsoft support, given the situation, I would think they would be willing to go above and beyond to help you.
Very sorry for your loss. And people usually don't have unique passwords on every logon; check to see whether any of his other passwords will let you logon.
Update. Well, I spent a total of 18 hours on that comp and used everyone's suggestions and still nothing. Luckily though, with one of those programs I was able to view the files on the hard drive and retrieved vital info. I think he had a new version of some Windows Beta that isn't even out yet, so this is the reason nothing seemed to work.
The good news out of this is that he had life insurance via his job and another plan with aarp so my mother and his wife of 39 years will be financially stable for some time to come.
Which brings up another point. I remember a thread here where people were asking "what would happen if to all of your domains if you passed away unexpectedly" or some sort like that. Going through this experience has definitely taught me a lesson that I need to get on the ball making sure that I assign someone who knows the domain game to be some type of executor in the case I do go before the wife.
Not a knock on her, but if I left unexpectedly tomorrow, she'd have no clue what to do or where to go in regards to handling 250+ domains.
So there is some good that has come out of this experience.