Where are files in the Recycle bin actually stored?

A. When you delete a file and the recycle bin is enabled the file is not actually deleted but just moved to the recycle bin.

A hidden folder is creating on each volume that has the recycle bin enabled named Recycled.

Any deleted files are moved to this folder and renamed to:

D<original drive letter><number file deleted>.<original extension>

and the original full name and path stored in a mapping file Info (Info2 in Windows 98). For example the file name

D:\www.ntfaq.com\index.html would become Dd1.html (if it was the first file deleted on the partition)